Gold prices edged lower on Thursday as markets weighed a decline in expectations for another Federal Reserve interest-rate increase against elevated US Treasury yields and a firmer dollar.
At 04:46 ET (08:46 GMT), spot gold declined 0.1% to $4,152.98 per ounce, while gold futures were also down 0.1% at $4,182.67 per ounce.
The US Dollar Index gained 0.3% to 101.79. Strength in the dollar can make dollar-denominated gold more expensive for buyers using other currencies.
Gold Falls 6% During September
Gold recorded a 6% decline in September, its largest monthly fall since June. The move followed the Federal Reserve’s first interest-rate increase since 2023 and indications that additional monetary tightening could remain under consideration.
Bond yields also moved higher globally during the month as markets assessed government debt and fiscal deficits. Rising yields can increase the opportunity cost associated with holding gold because the metal does not provide interest income.
“Following liquidation brought on by the Iran conflict, higher oil, inflation and yields, which pumped up the USD, gold rallied on renewed investor interest in late summer. However, the September [Federal Open Market Committee] rate hike, expectations of further rate hikes and rising oil prices pushed gold back on the defensive,” HSBC analysts said in a note.
Softer Inflation Data Reduces Expectations for October Rate Increase
Expectations for another Federal Reserve rate increase in October declined following the latest US inflation figures.
The personal consumption expenditures price index excluding food and energy increased by 0.2% in August, below market expectations. The previous month’s reading was also revised lower.
The implied probability of an October rate increase subsequently fell to approximately 34%, compared with almost 70% earlier in the week.
US consumer spending also increased at its fastest pace in more than a year during August. Longer-term Treasury yields remained close to multi-decade highs.
Market attention is now turning to Friday’s US employment report, which could provide further information on the Federal Reserve’s interest-rate outlook.
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