Gold Rises as US Rate Hike Expectations Fade

Gold rose today as declining expectations for the Federal Reserve (the US central bank) to raise interest rates this month helped dissipate pressure from a stronger US dollar and higher Treasury yields.

Ole Hansen, commodities research director at Saxo Bank, said: “Gold is trading near a key support level just above $4,100, while unfavorable macroeconomic conditions, including rising real yields and a strong dollar, continue to weigh on investor appetite.”

The dollar largely retained its gains from Monday, increasing the cost of the dollar-denominated metal for holders of other currencies. US 10-year and 30-year Treasury yields hit their highest levels in 24 years earlier today.

Expectations for a US interest rate hike this month have fallen after data showed slower-than-expected job growth in September, with employment figures for the previous two months also revised downward.

Higher interest rates would increase the opportunity cost of holding gold, which yields no return.

Hansen noted: “With few US economic data releases expected this week, market focus is likely to remain on the dollar and bond yields, as well as ongoing political and financial turbulence in the eurozone.”