Gold edges up after hitting 2-month low as markets weigh Fed rate path

Gold prices saw a slight increase on Thursday as the market digested the minutes of the Federal Reserve's September meeting, with investors looking for hints on the central bank's future interest rate plans. Spot gold rose 0.3% to $4,122.12 per ounce, marking its lowest level since August 5 due to a stronger dollar and higher US Treasury yields.

US gold futures for December delivery remained steady at $4,146.60. The Fed's policymakers had differing opinions on the need for rate hikes, with some arguing it was required to counteract price shocks from energy and other factors, while a more hawkish group believed it was essential to curb demand-driven inflation. Traders currently view a 21.6% chance of an October rate hike, but price an 85% probability for a December increase, according to the CME's FedWatch tool.

Fed Governor Christopher Waller suggested further rate hikes might be necessary, yet acknowledged there was flexibility in the pace of increases and left the possibility of a pause in October open. The technical analysis suggests that a breach below $4,100 could open the door to a descent towards $4,000, while a hold above that level might trigger a rebound towards $4,200.

Geopolitical factors, such as a decline in the number of vessels passing through the Strait of Hormuz due to increased tanker attacks, add to the pressure on gold. Silver prices slipped 2.2% to $58.80, platinum rose 1% to $1,647.30, and palladium increased 0.7% to $1,133.