Gold Surges as Fed Rate Hike Odds Tumble on Soft Inflation Data
Gold prices surged on Thursday, reaching around $4,175 an ounce as markets reassessed their expectations of a Federal Reserve rate hike in October. The catalyst for this move was softer-than-expected US inflation data, which revealed that inflation rose less than anticipated in August and that previous month's price pressures were revised lower.
The reduced odds of a rate hike in October have led to a decrease in the probability of such an event, with markets now pricing in less than a 40% chance. However, there is still nearly a 90% probability of an increase in December.
Despite this momentum, gold's gains were limited by higher Treasury yields and a stronger US dollar. The 10-year Treasury yield climbed to its highest level since 2002, raising the opportunity cost of holding non-yielding gold. Attention now turns to Friday's September nonfarm payrolls report, which is expected to show a net gain of around 90,000 jobs.