Gold turned higher on Tuesday as easing oil prices and fading Fed rate-hike expectations reduced pressure on policymakers to tighten quickly. Spot gold rose to $4,151.89 an ounce while gold futures gained to $4,179.15, with investors also watching this week's Fed minutes and next week's CPI print for further direction.
Spot gold rose 0.3% to $4,151.89 an ounce, while gold futures gained 0.5% to $4,179.15 an ounce on Tuesday, as hopes for renewed Middle East crude supply flows weighed on oil and eased fears of imminent policy tightening to fight energy-driven inflation. According to investinglive, the metal had briefly probed below last week's low before erasing those losses as oil prices and Treasury yields pulled back.
Oil retreat eases inflation pressure
Gulf oil exporters surpassed pre-war levels for roughly half of September, according to shipping data cited by Reuters, with the seven-day moving average for crude exports from the region at 18.3 million barrels per day on September 30. Brent crude futures last traded at $99.50 a barrel, edging lower as improving Gulf flows combined with a Group of Seven pledge to release emergency energy reserves. Softer oil, together with recent U.S. employment figures that came in weaker than expected, could relieve some pressure on the Federal Reserve to quickly raise rates to counter price pressures.
Rate-hike odds fall after soft jobs report
The Fed is anticipated to skip a rate hike at its October meeting before lifting borrowing costs in December, and minutes from the Fed's September meeting are due this week. A retreat in U.S. Treasury yields after Monday's selloff gave gold additional support, while the dollar index weakened slightly, helping the metal's appeal to overseas buyers. Fed officials Williams and Jefferson pushed back against October rate-hike expectations, and Friday's softer-than-expected U.S. payrolls report cut the hike probability to just 21%. ANZ analysts said gold has recovered from last week's sharp decline as investors reassess rising fiscal pressures globally, pointing to markets now assigning roughly a 20% chance of an October hike, down from around 70% a week earlier.
US-Iran talks and CPI risk cap the upside
The light calendar this week leaves US-Iran developments as the likely focus, so price action could remain mostly rangebound. A breakthrough in the talks would likely pull oil prices lower and give gold a boost on reduced rate-hike expectations, while another escalation would likely send crude higher and weigh on the metal. Next week's CPI reading carries similar stakes: a soft print would likely extend the dovish repricing that has supported gold, but a hot one without improvement in the Middle East could send the metal to new lows.
Sources: Investing.com, investinglive
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