Gold climbs as October Fed rate hike odds drop to 22%

Gold prices climbed on Monday as weaker-than-expected U.S. labor market data reduced the likelihood of a Federal Reserve interest rate hike in October. Spot gold rose 0.4% to $4,158.17 per ounce, while U.S. gold futures for December delivery gained 0.6% to $4,186.40. The probability of a Fed rate hike in October dropped to 22% from 64% a week earlier, according to the CME FedWatch Tool. However, markets still anticipate an 87% chance of a rate increase in December.

Weaker job growth in September, along with downward revisions to previous months' nonfarm payroll figures, fueled the shift in expectations. Gold, which does not pay interest, typically benefits from declining expectations of higher interest rates. KCM Trade chief market analyst Tim Waterer noted that while October hike expectations have eased, the broader hiking cycle remains intact.

Geopolitical tensions in the Middle East also influenced gold prices, as Yemen's Saudi-backed government launched a major military campaign against Iran-backed Houthis. Waterer emphasized that developments in the region would continue to impact gold through their effects on oil prices and inflation.

Other precious metals saw gains as well, with spot silver climbing 1.7% to $61.40 per ounce, platinum rising 0.6% to $1,708.48, and palladium increasing 0.6% to $1,175.04.