Gold Eases to 1-Month Low

Gold prices fell over 1% to the $4,100 per ounce mark on Wednesday, the lowest in over one month, amid pressure from high interest rates. Long-maturity bond yields surged to multi-decade highs among the world's largest credit markets, raising the opportunity cost of holding non-interest-bearing assets and pressuring precious metals. Yields on US Treasuries surged further following strong growth and price data unveiled by ISM PMIs. Reinforcing this, minutes from the Fed's last meeting indicated that the FOMC reached a degree of consensus that more rate hikes are warranted to tame inflation. Meanwhile, the threat of soaring budget deficits in the US, France, and Japan was also responsible for lifting borrowing costs.

Gold prices fell 2% to $4,080 an ounce on Wednesday, pressured by a stronger US dollar as investors awaited the Federal Reserve’s September meeting minutes for clues on future rate hikes. Markets largely expect the Fed to hold rates steady in October following softer jobs data, but still price in an over 80% chance of a December hike, according to CME FedWatch. Kansas City Fed President Jeff Schmid said interest rates may still need to rise to bring inflation under control, while San Francisco Fed President Mary Daly said the policy decision would depend on whether inflationary pressures prove temporary or persistent. Still, longer-term sentiment toward gold remains bullish. Delegates at the London Bullion Market Association’s annual conference in Italy forecast that gold could reach $5,013 an ounce over the next 12 months. Meanwhile, China’s central bank increased its gold purchases in September, extending its buying streak to 23 consecutive months, according to official data.

Gold fell below $4,150 an ounce on Wednesday, giving back gains from the previous session as oil prices rebounded on persistent risks to Middle East supply, keeping inflationary risks and rate hike concerns in focus. Oil prices advanced as Iran intensified attacks on tankers in the Strait of Hormuz in recent days, while Saudi forces continued to clash with the Houthis. Treasury yields also remained near multi-decade highs amid concerns over persistent inflation, rising fiscal risks and elevated AI-related debt issuances. Meanwhile, markets are pricing in nearly an 80% chance that the US Federal Reserve will keep rates unchanged this month following weaker-than-expected job growth in September and downward revisions to payrolls for the prior two months. Investors now await minutes from the Fed’s latest meeting for further clues on the monetary policy outlook.