Gold steadied on Tuesday but remained close to a more than seven-week low amid concerns that the Federal Reserve may maintain elevated interest rates for an extended period, while investors anticipated a series of US economic data releases. Spot gold remained relatively stable at $4,123.29 per ounce, as of 0038, following a decline to its lowest level since August 5 in the prior session. US gold futures declined by 0.3% to $4,155.50. Oil prices experienced an increase for the second consecutive session, driven by ongoing concerns regarding potential disruptions in Middle East supply.
Elevated oil prices can drive inflation by raising costs throughout the economy, potentially leading central banks to increase interest rates to manage price pressures effectively. Despite its reputation as a hedge against inflation, gold often faces challenges in a high-interest rate environment, as investors tend to prefer assets that provide yield. Officials from the US and Iran engaged in separate discussions with mediators, marking a renewed attempt to resolve the ongoing conflict that has persisted for seven months, as reported by representatives from both nations.
Markets currently assign a 70.3% probability to a Federal Reserve rate hike in October, as indicated by CME’s FedWatch Tool. Fed Governor Lisa Cook indicated that she anticipates ongoing inflationary pressures in the months ahead, driven by demand related to AI and elevated oil prices. However, she refrained from asserting that additional rate hikes will be necessary. Attention is focused on a series of US economic data set to be released this week, encompassing job openings, ADP employment figures, PCE data, and nonfarm payrolls, as market participants seek new insights into monetary policy direction.
In a separate development, the London Bullion Market Association is set to present its defence in London’s High Court starting October 7. The case revolves around allegations that the association had a duty of care toward two Tanzanian artisanal miners who were reportedly killed at the North Mara gold mine in 2019. Among other metals, spot silver declined by 0.3% to $60.76, platinum remained stable at $1,717.70, and palladium held steady at $1,214.75.
