Gold steady as traders weigh lower oil against higher yields

[SINGAPORE] Gold steadied, after advancing on Tuesday (Sep 29), as traders weighed a decline in oil prices that eased concerns over energy-led inflation against elevated Treasury yields.

Bullion was trading around US$4,180 an ounce, after gaining 1.6 per cent the day before.

Oil held a drop on signs that supply from the Middle East has risen to near pre-war levels as Saudi Arabia boosted flows through the key East-West pipeline, countering the stalemate over the Strait of Hormuz that pushed fuel prices higher earlier in the week.

Even so, Brent crude is up around 70 per cent in 2026 so far as the conflict nears its eighth month.

Pressure on gold remains from other quarters.

The yield on the US Treasury’s longest bond rose for a sixth day on Tuesday to the highest since 2002 on concerns that persistently elevated energy costs could prompt further rate hikes.

Higher yields typically weigh on bullion, which pays no interest.

US Federal Reserve officials have warned that tighter monetary policy is still needed even after they hiked interest rates mid-month for the first time since 2023.

Federal Reserve Bank of New York president John Williams said on Tuesday that one more rise “late this year” may be appropriate, prompting investors to dial back the probability of an increase at its next meeting in late October – just before US midterm elections – to about 50 per cent from 70 per cent.

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Williams said the Middle East conflict and the artificial intelligence build-out remain the main drivers of higher inflation, while three other Fed officials made reference to raising interest rates in separate speaking engagements on the day.

Gold was on track to end September down almost 6 per cent as energy cost pressures weigh on prices more broadly.

The release of US personal consumption expenditure data later on Wednesday – the Fed’s preferred inflation gauge – as well as non-farm payrolls data on Friday are the next economic indicators that will be closely watched for clues on the path for rates.

Spot gold edged up 0.1 per cent to US$4,184.27 an ounce at 7.50 am in Singapore.Silver was 0.1 per cent higher at US$61.54 an ounce. Platinum and palladium advanced slightly.

The Bloomberg Dollar Spot Index, a gauge of the US currency, was steady after rising 0.2 per cent the previous session. BLOOMBERG