Gold Holds Above $4,100 as Fed Bets Shift
Gold prices moved lower on Monday as the U.S. dollar strengthened, although losses remained limited after weaker U.S. economic data sharply reduced expectations for another Federal Reserve rate hike in October.
Spot gold was around $4,131.61 an ounce by 0422 GMT, while U.S. gold futures for December delivery were down slightly. The dollar index gained around 0.6%, making gold more expensive for buyers using other currencies and limiting demand for the precious metal.
Weaker U.S. jobs data changes rate expectations
U.S. employment growth slowed more than expected in September, while payroll figures for the previous two months were revised sharply lower. The data reduced expectations that the Federal Reserve would deliver another interest-rate increase at its October meeting.
The Fed raised its benchmark overnight interest rate by 25 basis points at its previous meeting, bringing the target range to 3.75%-4.00%. Higher interest rates generally create pressure on gold because the metal does not pay interest, making it relatively less attractive compared with interest-bearing assets.
The latest labour-market data therefore provided support for gold by reducing expectations of additional monetary tightening.
Middle East tensions remain another factor
Gold markets are also watching developments in the Middle East. Yemen’s Saudi-backed government has announced a major military campaign against the Iran-backed Houthis, while the Houthis have claimed attacks against Saudi Aramco facilities.
The geopolitical situation remains an important factor for precious metals because periods of heightened uncertainty can increase demand for assets viewed by investors as stores of value.
Other precious metals also moved higher during early trading. Spot silver gained around 1%, while platinum and palladium also recorded gains.
For gold traders, the market is therefore balancing two competing forces: softer U.S. economic data and reduced expectations for a Fed rate hike are supportive, while a stronger dollar continues to put pressure on the metal.
