Gold Rises as October Fed Rate Hike Expectations Fade
Gold prices climbed on Monday as recent weak economic data reduced the likelihood of a Federal Reserve rate hike in October, making the non-yielding asset more attractive. Spot gold rose 0.4% to $4,158.17 per ounce, while US gold futures for December delivery increased 0.6% to $4,186.40.
The latest US job growth figures showed a slower-than-expected pace in September, with significant downward revisions for the prior two months. This shift in economic data has lowered expectations of an October Fed rate hike, providing some support for gold prices. However, analysts note that the broader hiking cycle remains intact.
Traders now see only a 22% chance of a Fed rate hike in October, down from 64% a week ago, but still expect an 87% likelihood of an increase in December. The Fed had raised its benchmark rate to the 3.75%-4.00% range last month, marking its first hike in three years.
Geopolitical tensions in the Middle East also played a role in gold's movement. Yemen’s Saudi-backed government announced a major military campaign against the Iran-backed Houthis, which could impact oil prices and inflation outlook. Oil prices dipped slightly due to rising crude exports and G7 oil releases, despite ongoing concerns about Gulf oil infrastructure damage.
Other precious metals also saw gains, 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.