Gold Steadies Near Seven-Week Low as Fed Rate Hike Bets Firm Up
Gold held near a seven-week low as markets priced a strong chance of an October Fed rate hike, with investors awaiting key US economic data.
Gold prices steadied on Tuesday but remained close to a more than seven-week low, weighed down by expectations that the US Federal Reserve could keep interest rates elevated for longer. Spot gold was nearly flat at $4,123.29 an ounce as of 0038 GMT, having slipped to its weakest level since August 5 in the previous session. US gold futures eased 0.3% to $4,155.50.
Markets are assigning a 70.3% probability to a Fed rate increase in October, according to the CME FedWatch Tool. Higher borrowing costs tend to weigh on gold, which pays no yield, even though it is often sought as a hedge against inflation.
Oil prices advanced for a second straight session on persistent concerns about supply disruptions in the Middle East. Costlier crude can feed broader inflation by pushing up expenses across the economy, adding to the case for central banks to tighten policy.
Fed Governor Lisa Cook said she expects inflationary pressures to persist in the coming months, driven by demand linked to artificial intelligence and higher oil prices, though she did not explicitly call for further rate increases.
Investors are looking to a run of US economic releases this week for clues on the policy path, including job openings, ADP employment figures, the PCE inflation gauge and nonfarm payrolls.
Separately, US and Iranian officials held separate talks with mediators as part of a renewed push to end seven months of war, according to officials from both countries.
In London, the London Bullion Market Association is set to defend itself in the High Court from October 7 against a claim that it owed a duty of care to two Tanzanian artisanal miners who were allegedly killed at the North Mara gold mine in 2019.
Among other precious metals, spot silver slipped 0.3% to $60.76, platinum was steady at $1,717.70 and palladium was flat at $1,214.75.