Gold steadies as stronger US dollar and yields weigh on rate path

[MELBOURNE] Gold was steady as traders weighed the impact of a stronger US dollar and higher Treasury yields on the US Federal Reserve’s path for interest rates.

Spot bullion traded near US$4,140 an ounce. The US dollar neared its highest level in 2026 on Monday (Oct 5) as the euro weakened after a bond sell-off in France that had traders on alert for signs of regional contagion.

A stronger greenback is typically a headwind for commodities priced in the currency.

Treasuries came under renewed pressure, pushing longer-dated yields to multi-decade peaks as bonds extended their slide.

Further inflationary pressure was seen in an Institute for Supply Management report that showed cost pressures in US services last month grew the most in more than four years.

Despite the inflationary indicators, Fed officials have been talking down the chance of an imminent rate hike, and traders are pricing in a roughly one-in-four chance the central bank will raise borrowing costs at its meeting in October.

Minutes of the Fed’s September meeting, where rates were raised for the first time in three years, are due on Wednesday.

Higher rates are typically negative for bullion, relative to yield-bearing assets like Treasuries.

Gold fell more than 6 per cent in August on concerns over energy-driven inflation as well as the prospect for higher US rates and the strengthening US dollar.

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Spot gold was little changed at US$4,139.06 an ounce at 7.30 am in Singapore on Tuesday. Silver was steady at US$61.05 an ounce.

Platinum edged lower, while palladium rose marginally. The Bloomberg Dollar Spot Index, a gauge of the US currency, was steady after rising for four weeks. BLOOMBERG