- Traders expect a 22% chance of a Fed rate hike in October, 84% chance in December
- Metals Focus anticipates gold will reach all-time highs in 2027
- September FOMC minutes are due on Wednesday
Oct 5 (Reuters) - Gold prices were steady on Monday, as pressure from a stronger dollar and elevated US Treasury yields was offset by reduced expectations of a Federal Reserve rate hike this month.
Spot gold edged 0.1% lower to $4,139.89 per ounce by 2:04 p.m. EDT (1804 GMT). US gold futures for December delivery settled 0.1% lower at $4,156.8.
"We could see a near-term drop (in gold prices) before the buyers step in a meaningful way, and it's all to do with the fact that the dollar has been climbing higher and yields are elevated," said Fawad Razaqzada, a market analyst at Forex.com.
The US dollar index rose, making dollar-denominated metals more expensive for holders of other currencies, while 10-year US Treasury yields were near two-decade highs.
"In recent days, the economic data that we've seen from the US have largely disappointed expectations, and that has caused the interest rate hike bets to be pared," Razaqzada said.
Expectations the Fed will tighten its policy this month eased after US job growth slowed more than expected in September, and the nonfarm payrolls figures for the prior two months were revised lower, data showed on Friday.
Traders are factoring in a 22% probability of a Fed rate hike in October, compared to about 70% last week. However, they still price in an 84% chance of an increase in December, according to the CME FedWatch Tool.
Higher interest rates can be a deterrent to investing in non-yield-bearing gold, although gold can also be used as a hedge against inflation.
Investors await minutes of the September Federal Open Market Committee meeting, due later this week, which could help determine the central bank's future monetary policy after it raised interest rates last month for the first time in three years.
Precious metals consultancy Metals Focus expects gold to reach all-time highs in 2027 as investors seek alternatives to traditional dollar-denominated assets, and it predicted the metal will average $5,330 per ounce next year.
Among other metals, silver rose 1.2% to $61.09 per ounce, platinum gained 1.4% to $1,722.15 and palladium added 0.7% to $1,176.33.
Reporting by Pablo Sinha in Bengaluru; editing by Barbara Lewis and Joyjeet Das
Source: Reuters