Gold edges higher as markets weigh US jobs data impact on Fed path
The market now prices in a roughly 20% chance of a hike in October, down from 70% a week ago
[MELBOURNE] Gold edged up after its biggest weekly drop since June, as traders weighed the impact of a slowdown in the US jobs market and higher bond yields on the US Federal Reserve’s path for interest rates.
Bullion was trading near US$4,150 an ounce, after losing 3.4 per cent last week.
US non-farm payrolls increased by 29,000 in September, according to data released on Friday (Oct 2), below all estimates in a Bloomberg survey of economists. That eased pressure on the Fed to quickly raise borrowing costs to combat sticky inflation.
The market is now pricing in around a 20 per cent chance of a hike in October, down from 70 per cent a week ago. Higher rates typically reduce the appeal of the precious metal, which does not pay interest.
Inflationary pressures have not gone away, though.
Oil rose on widening conflict in the Middle East, as Yemen’s Saudi-backed leaders launched a military bid to recapture all areas under the control of the Houthis, who are supported by Iran.
US Treasury Secretary Scott Bessent downplayed concerns over high borrowing costs, saying it was in line with global trends, even after some rates hit their highest in more than two decades.
Gold fell more than 6 per cent in September on concerns over energy-driven inflation and the prospect for higher US rates.
Despite that, Fed officials have been talking down the chance of an imminent hike.
Minutes of the Fed’s September meeting, where rates were raised for the first time in three years, are due mid-week, providing clues on the path forward.
Spot gold rose 0.3 per cent to US$4,153.66 an ounce as at 8.40 am in Singapore. Silver climbed 1.3 per cent to US$61.15 an ounce after falling more than 6 per cent last week, the most since mid-July.
Platinum and palladium advanced. The Bloomberg Dollar Spot Index, a gauge of the US currency, was little changed after rising for the last three weeks. BLOOMBERG
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