Gold and Silver Prices Climb on Easing Rate Hike Expectations
Monday brought gains for bullion as a run of weak economic readings caused traders to scale back bets on a Federal Reserve hike in October, lifting demand for the metal that pays no yield. By 0150 GMT, spot gold had added 0.4% to reach $4,158.17 an ounce, and December-delivery US gold futures advanced 0.6% to $4,186.40. The reassessment followed Friday's figures showing September hiring cooled by more than forecast, alongside steep downward revisions to payroll counts for the two preceding months.[S1]
Silver joined the rally, pushing past $61 an ounce on Monday and erasing the declines of the prior session. Spot silver traded 1.7% higher at $61.40 an ounce. The metal drew strength from disappointing US employment figures, which reduced the pressure on the Federal Reserve to tighten policy further. Friday's report showed the economy created only 29,000 positions in September, well short of the 90,000 expected, after August's gain was revised down to 133,000. Unemployment climbed to 4.2%, and yearly wage growth unexpectedly eased to 3.0%, the slowest since May 2021.[S2]
Market Odds for Fed Rate Hikes Shift
According to the CME FedWatch Tool, the odds of an October Fed hike have fallen to 22% from 64% a week earlier, while a December increase is still given an 87% chance. Last month the US central bank lifted its benchmark overnight rate by 25 basis points to 3.75%-4.00%, marking its first hike in three years. Market pricing now assigns roughly an 80% probability that policymakers hold steady this month, with December hike expectations sitting near 69%.[S1][S2]
Tim Waterer, chief market analyst at KCM Trade, observed that weaker labor market readings have trimmed expectations for an October Fed move, giving gold a measure of support. Even so, he said the market continues to view the Fed's wider tightening path as unchanged, even should a pause materialize in October. Separately, high Treasury yields kept pressuring precious metals, with the US 10-year yield trading close to its loftiest level since 2002.[S1][S2]
Geopolitical Tensions and Oil Market Dynamics
Geopolitically, Yemen's internationally recognised, Saudi-backed government announced on Sunday that it would mount a large-scale military push to retake every area held by the Iran-backed Houthis. Waterer said Middle East events will keep mattering for gold, chiefly via their effect on crude prices and the wider inflation picture, and that swings are likely to stay pronounced while oil, yields and Fed rate expectations remain unsettled.[S1][S2]
Crude prices eased as greater exports from the Middle East and oil released by G7 countries boosted supply, even as worries persisted about additional harm to Gulf oil facilities tied to the Iran conflict. Elsewhere in metals, platinum rose 0.6% to $1,708.48, while palladium added 0.6% to $1,175.04.[S1]
