Gold steadies near $4,138 amid mixed Fed rate-hike expectations

Gold prices held steady near $4,138 an ounce on Monday, as fading expectations of a Federal Reserve rate hike in October provided some support. However, gains were limited by a stronger U.S. dollar and elevated long-dated Treasury yields, which reached multi-decade highs. Spot gold was trading at $4,137.70, down 0.05%, while spot silver rose 1.04% to $60.900.

U.S. equities closed higher, with the S&P 500 rising 0.7% to within 0.3% of its record high, and the Nasdaq Composite reaching a new record. European markets were mixed, with France’s CAC 40 falling 0.8% due to fiscal concerns, while other major indices posted modest gains.

Market positioning remains divided between weaker labor signals and persistent inflation pressure. Friday’s employment report showed slower job growth, but Monday’s ISM services PMI indicated rising prices and slight employment expansion. The probability of an October Fed rate hike dropped to around 22-24%, but December tightening remains a risk. The 10-year Treasury yield settled near 5.31%, its highest since April 2002.

The Strait of Hormuz and U.S.-Iran tensions continued to weigh on markets, though lower oil prices provided some relief from inflation pressures. Brent crude settled at $100.32, down 1.9%, and WTI crude fell 1.8% to $89.43. Analysts noted that softer labor or sentiment data could support gold, while firmer inflation expectations would keep yields elevated, pressuring bullion.