Gold Rises as Fed Rate Hike Bets Ease

Gold climbed above $4,170 an ounce on Monday, extending its recent gains as dovish remarks from Federal Reserve Chair Kevin Warsh prompted traders to scale back expectations of an October rate hike. Speaking at the IMF’s annual meetings in Bangkok on Friday, Warsh avoided signalling the outcome of this month’s FOMC meeting but noted that hotter-than-expected inflation had not changed his assessment of the US economy. The Fed has since entered its blackout period ahead of the October 27–28 policy meeting, with markets pricing in an approximately 84% probability of rates remaining unchanged. Gold also benefited from safe-haven demand as growing concerns over AI-related investments triggered an equity selloff and pushed bond yields lower. Meanwhile, escalating geopolitical tensions in the Middle East and Eastern Europe kept oil prices elevated, while violent protests in France and other European countries added to broader market uncertainty.

Gold climbed toward $4,200 an ounce on Friday, extending gains from the previous session as the recent selloff in equities drove safe-haven demand for government bonds and precious metals. The shift toward safer investments pushed bond yields sharply lower, easing pressure on non-yielding assets such as gold. Investors also weighed heightened geopolitical risks in the Middle East amid escalating hostilities between Saudi Arabia and Iran-backed Houthis in Yemen, while a Singapore-flagged container ship was sunk in the Strait of Hormuz this week by an Iranian projectile. Meanwhile, market participants continued to evaluate the Federal Reserve’s monetary policy outlook, with stronger-than-expected US economic data reinforcing expectations of further interest rate increases. Markets are currently pricing in approximately a 72% probability that the Fed will leave rates unchanged this month, while the likelihood of a rate hike in December has climbed to 92%.

Gold prices rose to around $4,150 an ounce on Thursday, supported by a broader flight to safety amid a global equity sell-off and rising inflation expectations. The tech rout, driven by concerns over the sustainability of AI spending in a high-interest-rate environment, added to market uncertainty. Meanwhile, US producer price data reinforced signs of mounting inflationary pressures, echoing Wednesday’s CPI report and strengthening expectations that the Fed will keep interest rates elevated for longer, putting further strain on heavily indebted borrowers. A weaker US dollar and ongoing geopolitical tensions in the Middle East and Ukraine provided additional support for the precious metal.