Gold rises slightly as Fed rate hike expectations fade
Gold prices saw a modest increase on Tuesday, as reduced expectations of a Federal Reserve interest-rate hike this month provided some support. Spot gold rose 0.7% to US$4,168.89 per ounce, while US gold futures for December delivery gained 1% to US$4,196.90. Despite this uptick, Ole Hansen, head of commodity strategy at Saxo Bank, noted that gold remains under pressure from macroeconomic headwinds, including rising real yields and a stronger US dollar.
The US dollar maintained its strength from Monday, making gold and other dollar-denominated commodities more expensive for foreign investors. US 10-year and 30-year Treasury yields reached fresh 24-year highs, further weighing on gold's appeal. Markets have scaled back bets for a Fed rate hike in October, with traders now seeing only a 21% chance of such a move, but they still anticipate a nearly 70% probability of a rate increase in December, according to CME's FedWatch Tool.
Investors are also monitoring political and fiscal turmoil in the eurozone, particularly rising government debt levels and widening budget deficits in France. Meanwhile, oil prices fell as supply concerns eased due to resilient Middle Eastern crude exports and a Group of Seven emergency stockpile release. On the geopolitical front, Saudi-backed Yemeni forces reported advancing to retake key areas around the Bab el-Mandeb Strait.
Among other precious metals, silver climbed 0.6% to US$61.4419, while platinum and palladium both declined, slipping 0.5% and 0.7% respectively.