Gold Struggles Amid Pressuring Yields and Geopolitical Tensions

Gold prices faced significant pressure last week, struggling to recover despite tepid US nonfarm payroll data released on Friday. The yellow metal attempted multiple rallies but failed to sustain them, as elevated yields, high oil prices, and a firmer US Dollar kept gold near $4,150. The week ended with a daily loss of 0.86% at $4,140 and a weekly decline of 3.36%. As of Monday night, gold was trading around $4,130, down nearly 0.2%.

Praveen Singh, Head of Currencies and Commodities at Mirae Asset ShareKhan, noted that gold is likely to remain under pressure unless yields fall. The metal's support around $4,100 was maintained by easing odds of a Fed rate hike in October. The US nonfarm payroll report for September showed a disappointing addition of only 29,000 jobs, well below the forecast of 90,000. Despite this, gold failed to capitalize on the weak data due to steady US yields and geopolitical tensions.

Geopolitical risks, particularly in the Middle East, have added to market volatility. Iran's attacks on vessels in the Strait of Hormuz and rising oil prices have contributed to uncertainty. Brent oil futures were trading around $101.80 on Monday night, down nearly 0.5%. Saudi Aramco CEO Amir Nasser warned that global crude oil stockpiles are running thin, which could further impact market dynamics.

Looking ahead, the week is relatively light on economic data, with key releases including the ADP employment report and the September FOMC meeting minutes. The probability of a Fed rate hike in October has dropped to 26%, with investors expecting three more hikes by June next year. Bundesbank President Nagel suggested that rising debt levels strengthen the case for central banks to increase their gold holdings.