Gold Price Buoys as Softer US Inflation Reduces Rate Hike Bets
Gold prices rose on Thursday as softer-than-expected US inflation data reduced bets for a Federal Reserve rate hike in October. The data showed US inflation rose less than expected in August, while price pressures were revised lower for the prior month.
The reduced likelihood of an October rate hike led to a 0.6% increase in spot gold to $4,181.02 per ounce by 08:56 a.m. EDT (1256 GMT), while US gold futures for December delivery rose 0.6% at $4,211.20.
David Meger, director of metals trading at High Ridge Futures, attributed the support in precious metals to lower rate hike expectations. However, the opportunity cost of holding gold increased due to 10-year US Treasury yields scaling their highest level in more than two decades, and a stronger dollar making greenback-priced bullion more expensive for holders of other currencies.
Investors now await Friday's September US nonfarm payrolls report and remarks from Fed policymakers for clues on the monetary policy outlook. Some analysts remain bearish on gold, citing the short-term trend as bearish and predicting a retest of the $4,000 level if tomorrow's nonfarm payrolls report surprises on the upside.