Gold gains as October Fed rate hike prospects fade

Gold prices rose on Monday as economic data dampened expectations of a Federal Reserve rate hike in October, making the asset more attractive. Spot gold reached $4,158.17 per ounce, while US gold futures for December delivery increased by 0.6% to $4,186.40. September job growth fell short of forecasts, with revised figures for the previous two months showing a significant decline.

"The softer labor market data has helped dial back October Fed hike expectations, which is providing gold some support," commented Tim Waterer, chief market analyst at KCM Trade. The probability of a Fed rate hike in October dropped to 22% from 64% a week earlier, while the chance of a December hike remained high at 87%, according to the CME FedWatch Tool.

The US central bank recently raised its benchmark interest rate by 25 basis points to the 3.75%-4.00% range, marking its first increase in three years. Geopolitical tensions in Yemen, where Saudi Arabia-backed forces face Iran-backed Houthis, could influence gold prices through their effect on oil prices and the inflation outlook.

Waterer noted that volatility is expected to persist as oil, yields, and Fed expectations fluctuate. Oil prices declined as Middle East exports of crude increased and oil released by the G7 nations, despite ongoing concerns about additional damage to Gulf oil infrastructure amid the Iran conflict. Silver, platinum, and palladium experienced gains of 1.7%, 0.6%, and 0.6% respectively, with prices at $61.40 per ounce, $1,708.48, and $1,175.04 per ounce.