Gold rises on debt concerns and easing Fed hike expectations
Gold prices climbed on Monday, benefiting from concerns over rising U.S. government debt and a slight easing of expectations for an October Federal Reserve rate hike. Spot gold increased by 0.4% to $4,159.89 per ounce, while U.S. gold futures for December delivery rose 0.64% to $4,188.70. Analyst Giovanni Staunovo of UBS noted that rising government debt levels remain a strong structural support for gold, despite challenges from higher interest rates and a stronger dollar.
The U.S. dollar index (.DXY) rose 0.3%, making gold more expensive for holders of other currencies. Investors are now awaiting the release of the minutes from the September Federal Open Market Committee meeting, which could provide insights into the Fed's future monetary policy. The likelihood of a Fed rate hike in October has dropped to 18%, but traders still see a 69% chance of an increase in December, according to the CME FedWatch Tool.
Oil prices fell on Monday due to increased Middle East crude exports and the release of oil stocks by the Group of Seven nations, which helped ease inflation concerns. While gold is traditionally seen as an inflation hedge, it tends to underperform in high-interest-rate environments. Geopolitical tensions also remained in focus, with Yemen’s Saudi-backed government launching a major military campaign against Iran-backed Houthis.
Other precious metals saw gains, with silver jumping 2.3% to $61.7967 per ounce, platinum rising 1.7% to $1,727.82, and palladium adding 1.1% to $1,181.18.