Gold climbs slightly as Fed rate hike odds drop

Gold prices saw a modest uptick on Tuesday, reaching around $4,150 per ounce, as markets scaled back expectations of an October interest rate hike by the Federal Reserve. The shift in sentiment came after weaker-than-anticipated job growth in September and revisions to previous payrolls data, reducing the likelihood of a rate increase this month to just 21%, according to the CME FedWatch Tool. However, traders are still pricing in a nearly 70% chance of a rate hike in December, which could continue to pressure gold due to its non-yielding nature.

The rise in gold was tempered by a stronger US dollar and higher Treasury yields, both of which make dollar-denominated commodities like gold more expensive for international buyers. The US 10-year and 30-year Treasury yields hit fresh 24-year highs on Monday, adding to the headwinds for the precious metal. 'Gold trades near key support just above $4,100, with macroeconomic headwinds from rising real yields and dollar strength continuing to weigh on investor appetite,' said Ole Hansen, head of commodity strategy at Saxo Bank.

With limited US economic data expected this week, market focus is likely to remain on the dollar, yields, and ongoing political and fiscal turmoil in the euro zone. Rising government debt levels and widening budget deficits, particularly in France, have pushed sovereign bond yields higher, keeping investors on edge. Meanwhile, oil prices fell on Tuesday as supply concerns eased due to resilient Middle Eastern crude exports and a G7 emergency stockpile release.

Among other precious metals, silver remained flat at $61.10 per ounce, while platinum eased 0.6% to $1,710.71 and palladium fell 1% to $1,160.66.