Gold Climbs as October Rate Hike Odds Decline and Debt Concerns Rise

Gold prices rose on Monday, benefiting from concerns over rising US government debt and easing expectations of an imminent Federal Reserve rate hike. Spot gold climbed 0.4% to $4,159.89 per ounce by 1138 GMT, while US gold futures for December delivery gained 0.64% to $4,188.70.

UBS analyst Giovanni Staunovo highlighted that rising government debt levels continue to support gold prices, despite challenges from higher interest rates and a stronger US dollar. In August, total US debt surpassed $40 trillion for the first time, raising fears of a potential fiscal crisis.

The US dollar index (.DXY) increased by 0.3%, making dollar-denominated metals more expensive for foreign investors. Investors are now focusing on the minutes from the September Federal Open Market Committee meeting, which could provide insights into the Fed's future monetary policy.

Expectations of a Fed rate hike in October have dropped sharply, with traders now seeing only an 18% probability, according to the CME FedWatch Tool. However, there is still a 69% chance of a rate increase in December. Meanwhile, oil prices fell as rising Middle East crude exports and a release of oil stocks by the Group of Seven nations eased inflation concerns.

Among other precious metals, silver jumped 2.3% to $61.7967 per ounce, platinum gained 1.7% to $1,727.82, and palladium added 1.1% to $1,181.18. On the geopolitical front, Yemen’s Saudi-backed government announced a major military campaign to recapture areas controlled by the Iran-backed Houthis.