Gold steadies as easing US bond yields reduce rate hike bets

US Federal Reserve officials suggested further deliberation is required before deciding on the next step for interest rates, allowing gold to maintain a slight increase. Meanwhile, the metal traded near $4,180 per ounce, up 0.5 percent from the last trading day but aiming for a 2 percent drop by the end of the week. US Treasury yields fell across the spectrum on Thursday, with the 10-year yield falling from a 24-year peak, as worries about France’s fiscal situation boosted demand for safe-haven assets.

This softened the demand for gold, which does not pay interest, leading to a 6 percent decline in September. Fed vice-chair Philip Jefferson hinted that more time might be necessary to determine if additional interest rate hikes are necessary, decreasing the likelihood of a rate increase in October from 70 percent to around 27 percent.

Oil prices increased due to reports of potential Middle East conflict intensification, which could disrupt energy supplies from the region. The US military might deploy an extra aircraft carrier and 10,000 sailors and Marines to the Persian Gulf, according to a US official. This action would bring the number of carrier strike groups back to the same level as during the initial war against Iran in late February.

Analyst Hebe Chen from Vantage Global Markets noted that while softer US inflation, diminished expectations of an October Fed hike, and decreasing oil prices provided some relief to gold, persistent high Treasury yields and the strong US dollar remained significant obstacles, keeping gold around $4,100. Spot gold climbed 0.1 percent to $4,182.20 an ounce at 8 am in Singapore.

Silver rose 0.3 percent to $61.14 an ounce, following a 0.9 percent increase the day before. Platinum and palladium also saw minor gains. The Bloomberg Dollar Spot Index, which measures the US currency, remained stable after a 0.4 percent rise in the previous session.