Gold prices saw a modest increase on Thursday, recovering from a two-month low reached in the prior session. The rise came as investors scrutinized the minutes of the US Federal Reserve's September meeting for hints about future interest rate adjustments. Spot gold climbed 0.3% to $4,122.12 per ounce by 1128 GMT, rebounding after hitting its lowest point since August 5. The previous day's decline was driven by a stronger dollar and higher US Treasury yields, both of which typically reduce the appeal of gold.
The Fed's policymakers were divided in September over whether to raise interest rates. Some participants saw a hike as necessary to counteract inflation from energy and other price shocks, while others adopted a more hawkish stance, advocating for rate increases to prevent demand-driven inflation. Market traders currently assign a 21.6% chance of an October rate hike but see an 85% probability of an increase in December, according to the CME's FedWatch tool.
US Federal Reserve Governor Christopher Waller commented that additional rate hikes would likely be necessary but noted flexibility in the pace of increases, leaving the door open for a pause in October. Analyst Lukman Otunuga from FXTM observed that gold prices are fluctuating above $4,100 due to geopolitical tensions fueling inflation fears and year-end Fed hike expectations. A stronger dollar and rising Treasury yields could further pressure gold prices, he added.
Technical indicators suggest downside risks for gold, with a sustained break below $4,100 potentially opening a path toward $4,000. Conversely, holding above $4,100 could trigger a rebound toward $4,200. Meanwhile, geopolitical concerns intensified as the number of vessels transiting the Strait of Hormuz dropped to a two-month low following recent attacks on tankers in the region.
Other precious metals showed mixed movements. Spot silver fell 2.2% to $58.8, platinum rose 1.0% to $1,647.30, and palladium climbed 0.7% to $1,133.00.