Gold Struggles as Dollar Strength Counters Eased Rate Hike Bets

On Monday, October 5, gold prices showed little clear direction as traders weighed mixed signals. A stronger U.S. dollar and high Treasury yields pressured gold lower, while easing expectations for Federal Reserve rate hikes provided some support. Spot gold fell 0.30%, trading at $4,128.02 during the session.

The latest U.S. business survey data offered little new guidance. The S&P Global Services PMI was revised slightly higher to 58.8, while the ISM Services PMI dropped to 54.9, missing expectations. Earlier, weaker-than-expected employment data dampened rate hike expectations, with nonfarm payrolls adding just 29,000 jobs in September. The unemployment rate rose to 4.2%, and wage growth slowed to 3.0% year-over-year.

Despite the weak jobs report, market expectations for a Fed rate hike in October fell to around 20%, down from nearly 70% earlier. However, policymakers remain concerned about inflation, keeping the outlook for further tightening in place. Deutsche Bank economists still expect two more 25 basis point rate hikes in the next two quarters. Meanwhile, the U.S. dollar index hit an intraday high of 102.53, boosting Treasury yields near 5.30%.

Technical analysis shows gold trading below key moving averages, with bulls struggling to break above $4,200. The RSI and MACD indicators suggest weak momentum and short-sided pressure. Support levels include $4,110 and $4,100, with a break below potentially triggering further declines toward $4,000.