Gold rises as October Fed rate hike expectations fade
Gold prices edged higher on Monday as recent weak economic data reduced the likelihood of a Federal Reserve rate hike in October, boosting demand for the non-interest-bearing asset. Spot gold rose 0.4% to $4,158.17 per ounce, while US gold futures for December delivery climbed 0.6% to $4,186.40.
The shift in sentiment came after US job growth slowed more than expected in September, with nonfarm payrolls data for the prior two months also revised downward. Tim Waterer, chief market analyst at KCM Trade, noted that the softer labor market data has lowered October Fed hike expectations, providing some support for gold. However, he cautioned that the broader hiking cycle remains intact, even if a pause occurs this month.
Traders now see only a 22% chance of an October rate hike, down from 64% a week ago, though they still price in an 87% likelihood of an increase in December, according to the CME FedWatch Tool. The Fed last raised rates in July to a range of 3.75%-4.00%. Geopolitical tensions in the Middle East, particularly Yemen’s military campaign against Houthi rebels, could also influence gold prices through their impact on oil and inflation.
Other precious metals saw gains as well, with spot silver up 1.7% to $61.40 per ounce, platinum rising 0.6% to $1,708.48, and palladium firming 0.6% to $1,175.04. Oil prices slipped despite concerns over Gulf oil infrastructure due to rising exports from the Middle East and G7 nations’ oil releases.