Gold inches lower as firmer dollar, higher yields weigh

On Tuesday, gold prices dipped slightly as the US dollar strengthened and Treasury yields rose. Spot gold fell by 0.3% to $4,128.83 per ounce by 0400 GMT. However, gold futures remained stable at $4,155.90. The US dollar held its ground, making commodities priced in dollars more costly for investors with other currencies. The 10- and 30-year Treasury yields reached 24-year highs on Monday due to widespread negative sentiment in the bond market.

Despite the recent price dip, fundamentals supporting gold in the long term remain strong. The next significant factor influencing gold's price could be geopolitical risks in the Middle East, according to Kyle Rodda, a senior financial market analyst at Capital.com. Alternatively, a substantial shift in US rate expectations might trigger the next price breakout. Therefore, every piece of price data is crucial for traders.

The easing of expectations for a US rate hike this month, following data showing US job growth slowed more than anticipated in September, weighed on gold. Traders currently price an 87% probability of an increase in December, as per CME's FedWatch Tool. Higher interest rates raise the opportunity cost of holding non-yielding gold.

However, US services sector activity slowed in September, while strong domestic demand stretched supply chains and pushed a measure of business input prices to its highest level in over four years, indicating that inflation may persist into 2027.

In other metals, silver fell 0.6% to $60.69, platinum dropped 0.5% to $1,712.20, and palladium eased 0.5% to $1,166.86.