Gold Holds Steady as Higher-for-Longer Rate Outlook Weighs on Sentiment
Gold traded nearly flat as expectations of prolonged high US interest rates offset safe-haven demand, with Fed comments and geopolitical risks in focus.
Gold prices lacked direction on Tuesday, with the metal trading close to unchanged as expectations that US interest rates will remain elevated for an extended period continued to pressure sentiment.
Spot gold was little changed at $4,344.29 an ounce by 0151 GMT, while US gold futures held steady at $4,381.80.
Bullion is traditionally sought as a hedge against inflation and geopolitical uncertainty, but it tends to lose appeal when interest rates are high, since investors can earn returns on yield-bearing assets instead.
With a light US economic calendar this week, market attention is fixed on remarks from Federal Reserve officials for clues on whether the central bank could raise rates again in October. Crude oil prices are also in focus, according to Chris Weston, head of research at Pepperstone.
Weston noted that while crude has eased modestly from recent peaks, a renewed climb that lifts inflation expectations would reinforce the rate narrative and likely keep gold under pressure.
The Fed raised its policy rate by a quarter of a percentage point last week and indicated further increases could lie ahead. St. Louis Fed President Alberto Musalem said additional tightening will probably be necessary to bring down inflation driven by strong demand and a commodity price shock that has spread beyond oil, adding that acting sooner would be preferable to waiting.
On the geopolitical front, Houthi fighters advanced to capture strategic high ground in Yemen, aiming to sever the Red Sea coast from areas still held by Saudi-backed forces. The push followed a report that US President Donald Trump had called off American strikes on the group at the last minute.
Oil prices edged higher as the market steadied after several sessions of declines, with investors watching for developments in potential US-Iran talks on the sidelines of the United Nations General Assembly this week.
Among other precious metals, spot silver gained 0.3% to $66.19, platinum rose 0.3% to $1,792.76 and palladium added 0.3% to $1,305.10.