Gold rises as October Fed rate hike prospects dim
Gold prices saw a modest rise in early Asian trading on Monday, as recent economic indicators reduced the likelihood of a Federal Reserve rate hike in October. Spot gold XAU= climbed 0.3% to $1,953.32 per ounce by 0022 GMT, while US gold futures for December delivery GCcv1 increased by 0.5% to $1,982.40.
The shift in market sentiment followed Friday’s weaker-than-expected US job growth data in September. The nonfarm payrolls count for the prior two months was also revised downward, making another interest rate hike from the Fed this month highly unlikely. Fed policymakers had already been cautious about delivering a second consecutive rate increase, preferring to review more economic data before making a decision.
The US central bank had raised its benchmark overnight interest rate by 25 basis points last month, bringing it to the 3.75%-4.00% range. Higher interest rates typically weigh on gold prices, as the non-interest-bearing asset becomes less appealing to investors.
On the geopolitical front, Yemen’s Saudi-backed government announced a major military campaign to reclaim areas controlled by the Iran-backed Houthis. Meanwhile, other precious metals also saw gains, with spot silver XAG= rising 1% to $60.97, platinum XPT= adding 0.4% to $1,705.70, and palladium XPD= firming 0.7% to $1,176.00.