Gold steady as dollar strength counters softer rate-hike bets
Gold prices held steady on Tuesday, with little change observed as a stronger dollar countered easing expectations of a Federal Reserve rate hike in October. Spot gold was steady at $4,141.81 per ounce by 0033 GMT, while US gold futures for December delivery edged up 0.3% to $4,169.10. The dollar's strength made gold more expensive for holders of other currencies, offsetting support from softer rate-hike bets.
The 10- and 30-year US Treasury yields hit 24-year highs on Monday, reflecting negative sentiment in the bond market. Expectations of a rate hike in October eased after data showed slower-than-expected US job growth in September and downward revisions to prior nonfarm payrolls. However, traders still priced an 86% probability of a Fed rate hike in December, according to CME's FedWatch Tool.
Despite rising interest rates increasing the opportunity cost of holding non-yielding gold, the metal remains a strategic reserve asset. Concerns over rising government debt and geopolitical instability boost its appeal as a haven from risk, as noted by two central bankers on Monday. Data also highlighted slowing US services sector activity in September and elevated inflation pressures, suggesting inflation could remain high into 2027.
Among other metals, spot silver was flat at $61.04, platinum edged up 0.1% to $1,722.40, and palladium firmed 0.2% to $1,175.39. Geopolitical tensions were also in focus, with Saudi-backed Yemeni government forces advancing to retake areas around the Bab el-Mandeb Strait from Iran-backed Houthis.