Gold Holds Firm as Dollar Strength Counters Easing Rate-Hike Bets
Gold prices remained largely unchanged on Tuesday, as a stronger dollar countered support from reduced expectations of a Federal Reserve rate hike in October. Spot gold was steady at $4,141.81 per ounce, while US gold futures for December delivery rose slightly by 0.3% to $4,169.10. The dollar's strength made gold more expensive for investors holding other currencies, offsetting the metal's appeal as a hedge against inflation and geopolitical risks.
The likelihood of a Fed rate hike this month diminished after a recent jobs report showed weaker-than-expected US employment growth in September. However, traders still anticipate an 86% chance of a rate increase in December, according to CME's FedWatch Tool. Rising interest rates typically make non-yielding assets like gold less attractive, as they increase the opportunity cost of holding them.
Despite the volatility in bond markets, where 10- and 30-year US Treasury yields hit 24-year highs, gold retains its status as a strategic reserve asset. Central bankers highlighted its role as a safe haven amid rising government debt and geopolitical tensions, even as bond yields surged this year. Additionally, data indicated that US services sector activity slowed in September, while inflationary pressures persisted, suggesting elevated inflation could extend into 2027.
Elsewhere, other precious metals showed minor movements, with spot silver flat at $61.04, platinum up 0.1% to $1,722.40, and palladium rising 0.2% to $1,175.39. Meanwhile, geopolitical tensions flared as Saudi-backed Yemeni forces advanced to retake areas around the Bab el-Mandeb Strait, pushing back Iran-backed Houthis.