Gold Holds Steady Amid Easing Rate Hike Bets and Rising Oil Supplies

Gold prices remained steady as rising oil supplies from the Middle East and a drop in bond yields reduced expectations of an interest rate hike by the US Federal Reserve this month. Bullion was trading around $4,165 an ounce, following a 0.6% increase the previous day. Oil flows from the region have reached about 80% of pre-conflict levels, according to Shell Plc Chief Executive Officer Wael Sawan, with similar estimates from other major banks and shipping analytics firms.

Despite these developments, risks persist. Tehran has escalated attacks on tankers in the Strait of Hormuz, and oil executives caution that the world is running short of solutions to manage the impact of the ongoing US-Iran conflict, now in its eighth month. Treasury yields declined on Tuesday as oil prices stabilized, after hitting multi-decade highs the day before. Wall Street saw record highs as traders bet that companies can handle inflationary pressures.

Fed officials have downplayed the likelihood of an immediate rate hike, with traders now assigning less than a one-in-five chance of an increase at the October meeting, down from around 40% a week earlier. The minutes from the Fed’s September meeting, where borrowing costs were raised for the first time in three years, are expected later on Wednesday and will provide further insights into future monetary policy.

Central bankers meeting in Italy this week highlighted gold’s growing importance in diversifying reserves amid geopolitical uncertainties, enhancing its appeal as a safe-haven asset. Spot gold was nearly unchanged at $4,167.05 an ounce in early Asian trading, while silver, platinum, and palladium held steady. The Bloomberg Dollar Spot Index remained flat after a 0.2% drop in the prior session.