Gold little changed as fading likelihood of U.S. rate hike offset by rising dollar and yields

Gold prices fell below $4,150 on Monday as the US Dollar strengthened and US Treasury yields rose, eroding the precious metal's appeal as a safe-haven asset. The US Dollar Index (DXY) increased by 0.25% to 102.17, while the 10-year Treasury yield rose six basis points to 5.341%. The Federal Reserve's Core Personal Consumption Expenditures (PCE) inflation gauge remained mostly unchanged, prompting investors to reduce expectations of a rate hike this month.

US services sector activity showed a slight decline in September, with the ISM Services PMI falling from 55.4 to 54.9. Input costs exceeded expectations, with prices paid rising from 72.6 to 74. The employment component in new orders grew, but overall, new orders slowed. The Fed's latest inflation gauge, the Core PCE, was flat, leading to a shift in investor sentiment towards a more dovish stance.

A larger-than-expected decline in September Nonfarm Payrolls further weighed on gold prices, pushing them below the psychologically significant $4,150 level. Although gold can act as an inflation hedge, its price is negatively correlated with the US Dollar and US Treasuries, making it vulnerable to interest rate movements. With geopolitical tensions in the Middle East escalating, investors remain cautious, keeping an eye on upcoming economic data and Federal Open Market Committee (FOMC) meeting minutes for clues on future interest rate decisions.