Gold, Silver Prices Slip as Cooler Inflation Data Weighs on Rate Hike Odds

Spot gold and silver prices dropped on Wednesday as cooler US inflation data and lower Fed odds offset another rise in long-dated Treasury yields. The August PCE inflation rate rose 0.3% month-over-month and 3.4% year-over-year, below expectations. The ADP private payrolls report showed a gain of 90,000 jobs in September, above forecasts.

The 10-year Treasury yield rose to the 5.29% area, while the 30-year yield held near 5.65%. This led to a decrease in Fed hike odds from roughly 70.9% last week to about 37.1% on Wednesday. The October employment report will be a key test for interest rates.

The Strait of Hormuz situation remains unresolved, and the market impact for gold is mixed: lower Fed hike odds support bullion, but a persistent Hormuz premium keeps energy inflation and long yields embedded in the trade. Brent crude settled near $103.50 a barrel, while WTI settled near $90.42.