Gold prices rose on Monday after recent weak economic data sharply reduced expectations of a Federal Reserve interest-rate hike in October, boosting the appeal of the non-yielding asset.
Spot gold rose 0.4% to $4,158.17 an ounce by 01:50 GMT, while U.S. gold futures for December delivery gained 0.6% to $4,186.40.
U.S. data released on Friday showed that job growth slowed more than expected in September, while nonfarm payroll figures for the previous two months were revised sharply lower.
“Soft labor-market data have helped reduce expectations of a Federal Reserve rate hike in October, providing some support for gold,” said Tim Waterer, chief market analyst at KCM Trade. “But the market still views the Fed’s broader tightening cycle as intact, even if there is a pause in October.”
According to CME Group’s FedWatch tool, traders now see a 22% chance of a Federal Reserve rate hike in October, down from 64% a week earlier. They still price in an 87% probability of a rate increase in December.
The U.S. central bank raised its benchmark overnight interest rate by 25 basis points last month to a range of 3.75%-4%, marking its first rate increase in three years.
On the geopolitical front, Yemen’s internationally recognized, Saudi-backed government said on Sunday that it was launching a major military campaign to retake all areas of the country controlled by the Iran-backed Houthis.
“Developments in the Middle East will remain important for gold, particularly through their impact on oil prices and broader inflation expectations,” Waterer said. “Volatility is likely to remain elevated as long as oil prices, yields and Fed expectations continue to shift.”
Oil prices fell as increased crude exports from the Middle East and withdrawals from oil inventories in G7 countries added to supplies, although concerns persisted over further damage to Gulf oil infrastructure amid the war with Iran.
Among other precious metals, spot silver rose 1.7% to $61.40 an ounce, platinum gained 0.6% to $1,708.48, and palladium advanced 0.6% to $1,175.04.
Source: Reuters
