Gold Prices Stabilize After Dropping to Two-Month Low

Gold prices stabilized on Thursday after touching a two-month low in the previous session, as investors weighed the likelihood of the Federal Reserve (the US central bank) raising interest rates again before the end of the year. Spot gold showed little change, settling at $4,116.67 per ounce. Prices had touched their lowest level since August 5 on Wednesday, weighed down by a stronger US dollar and higher US Treasury yields. US gold futures stabilized at $4,140.70, according to Reuters.

Chris Weston, head of research at Pepperstone, said: “The case for short-term gold investment still faces challenges, and we will need the price to break above $4,275 to become more optimistic about near-term upside prospects.” He added: “If markets begin to interpret rising long-term bond yields as a reflection of sovereign credit and financial risks, rather than as evidence of strong economic fundamentals, gold may begin to decouple positively from bond yields, and currency-hedging trades could regain strength.”

Minutes from the Federal Reserve’s last meeting showed that policymakers were divided last month over the rationale for raising interest rates. Some argued that a rate hike was necessary to ward off the impact of energy price shocks and other disruptions, while a group leaning toward tighter monetary policy viewed it as essential to guard against demand-driven emerging inflation.

Data from the CME Group’s FedWatch tool shows traders see only a 19% probability of a rate hike later this month, but an 86% probability of a hike in December. Higher interest rates reduce the appeal of gold, which yields no return.

IMF Managing Director Kristalina Georgieva warned that the global economy faces threats from persistently high energy prices, record-high public debt levels, and risks stemming from the artificial intelligence investment boom. She urged governments to implement preventive fiscal and monetary policy measures.

Among other precious metals, spot silver fell 1.9% to $59.01, platinum rose 1.6% to $1,657.18, and palladium gained 1.1% to $1,136.80.