Gold prices remained relatively stable on Tuesday, as a stronger dollar countered the support stemming from diminishing expectations of a Federal Reserve rate increase this month. Spot gold maintained its position at $4,141.81 per ounce by 0033. US gold futures for December delivery increased by 0.3%, reaching a price of $4,169.10. The dollar maintained its strength, resulting in an increase in the cost of greenback-denominated commodities for those holding alternative currencies.
The 10- and 30-year US Treasury yields reached their highest levels in 24 years on Monday, reflecting the prevailing negative sentiment in the bond market. Expectations for a US rate hike in October have diminished following data released on Friday, which indicated that job growth in the US decelerated more than anticipated in September, alongside downward revisions to nonfarm payrolls for the preceding two months. Nonetheless, market participants continue to assign an 86% likelihood to a Federal Reserve rate increase in December, as indicated by CME’s FedWatch Tool.
Rising interest rates elevate the opportunity cost associated with holding non-yielding gold. Gold continues to be viewed as a strategic reserve asset, with rising government debt and geopolitical instability enhancing its attractiveness as a safe haven from risk, according to two central bankers on Monday, despite the increase in bond yields observed this year. Data indicated that activity within the US services sector decelerated in September, while robust domestic demand exerted pressure on supply chains and elevated a gauge of prices paid by businesses for inputs to its highest point in over four years, implying that inflation may persist at elevated levels into 2027.
In a rapid manoeuvre, Saudi-backed Yemeni government forces have reclaimed control over the coastal regions surrounding the Bab el-Mandeb Strait, extending their reach to the city of Mocha. This development, as reported by the government, has resulted in the expulsion of Iran-backed Houthis from the majority of territories they had captured in the previous month. Among other metals, spot silver remained unchanged at $61.04, platinum increased by 0.1% to $1,722.40, and palladium rose by 0.2% to $1,175.39.
