Gold held roughly flat on Thursday after posting its biggest monthly loss since June, as traders weighed a firmer dollar and elevated Treasury yields against fading bets on another Federal Reserve rate hike this month. Spot prices sat at $4,152.98 an ounce, with Friday's U.S. jobs report now in focus for the next move.
Gold prices dipped 0.1% to $4,152.98 an ounce on Thursday, while gold futures fell the same amount to $4,182.67 an ounce. The moves came as investors balanced reduced expectations for another Fed rate hike this month against elevated Treasury yields and a stronger dollar.
The U.S. dollar index rose 0.3% to 101.79, making bullion more expensive for overseas buyers. A stronger dollar can dent gold's appeal in international markets.
Gold posts worst monthly loss since June
Gold fell 6% in September, its biggest monthly decline since June, after the Fed raised interest rates for the first time since 2023 and signaled that additional tightening could still be necessary. Global bond yields also climbed during the month as concerns over rising government debt and fiscal deficits pushed up term premiums, and higher yields increase the opportunity cost of holding gold, which pays no interest.
According to HSBC: "expectations of further rate hikes and rising oil prices pushed gold back on the defensive". Earlier in the summer, HSBC analysts noted, gold had rallied on renewed investor interest following liquidation tied to the Iran conflict and higher oil, inflation and yields.
Inflation data cuts rate-hike odds
Still, gold found some support from fading expectations for an imminent Fed rate hike this month. The Fed's preferred inflation gauge, the core personal consumption expenditures price index, rose 0.2% in August, below expectations, and the previous month's reading was revised lower too.
As a result, traders sharply cut the odds of an October rate increase: the implied probability fell to about 34%, from almost 70% earlier in the week. At the same time, U.S. consumer spending rose in August at its fastest pace in more than a year, reinforcing views that the economy can withstand higher interest rates. That strength kept longer-dated Treasury yields near multi-decade highs.
Markets now turn to Friday's U.S. jobs report for further clues on the Fed's rate path and the outlook for bullion.
Source: Investing.com
Trading involves risk.
Risk Disclaimer
