Gold gains as October Fed rate hike prospects fade

New York markets saw gold prices rise on Monday as economic data and geopolitical developments weakened expectations of a Federal Reserve rate hike in October, making the non-yielding asset more attractive to investors. By 1:50 GMT, spot gold was trading at US$4,158.17 per ounce, up 0.4 percent, while US gold futures for December delivery increased by 0.6 percent to US$4,186.40.

September job growth proved weaker than anticipated, and the non-farm payrolls count for previous two months was revised downward significantly. This led many to lower their expectations for a Federal Reserve rate hike in October, according to Tim Waterer, a chief market analyst at KCM Trade. Traders now estimate a 22 percent chance of a Fed rate hike in October, down from 64 percent a week earlier, while still maintaining an 87 percent probability of an increase in December, as per the CME FedWatch Tool.

The U.S. central bank recently raised its benchmark interest rate by 25 basis points to the 3.75-4.00 percent range, marking its first hike in three years. Geopolitical events, particularly the Saudi-backed government's military campaign against Iran-backed Houthis in Yemen, will continue to influence gold prices, particularly through their impact on oil prices and the broader inflation outlook.

Waterer noted that volatility is likely to persist as long as oil, yields, and Fed expectations remain uncertain. Oil prices fell due to increasing crude exports from the Middle East and G7 nations, along with the release of oil, despite ongoing concerns about further damage to Gulf oil infrastructure amid the ongoing Iran war. In other metals, spot silver increased by 1.7 percent to US$61.40 per ounce, platinum rose by 0.6 percent to US$1,708.48, and palladium climbed by 0.6 percent to US$1,175.04.