Gold prices stabilized after posting their biggest weekly loss since June, as traders assessed the impact of a slowing U.S. labor market and rising bond yields on the Federal Reserve's interest rate path.
The price of the precious metal hovered near $4,150 an ounce, after losing 3.4% last week. Non-farm payrolls in the United States rose by 29,000 in September, according to data released on Friday, a level that fell short of all forecasts in a Bloomberg survey of economists. This eased pressure on the Federal Reserve to act quickly to raise borrowing costs in order to combat persistent inflation.
The market is now pricing in a roughly 20% probability of an October interest rate hike, down from 70% a week ago. Higher interest rates typically reduce the appeal of the precious metal, which does not yield interest.
Inflationary pressures have not disappeared
But inflationary pressures have not disappeared. The global benchmark Brent crude is still above $100 a barrel, and some yields remain near their highest levels in more than two decades.
On the other hand, Treasury Secretary Scott Bessent downplayed concerns about rising borrowing costs, saying they were in line with global trends.
Gold prices fell by more than 6% last month due to concerns about inflation driven by energy prices, the prospect of a US interest rate hike, and a stronger dollar, which made gold more expensive for many buyers. Despite this, Federal Reserve officials have downplayed the likelihood of an imminent rate increase.
The minutes from the Federal Reserve's September meeting, at which interest rates were raised for the first time in three years, are due to be released midweek and will provide clues about the path forward.
Manav Modi, a commodities analyst at Mumbai-based Motilal Oswal Financial Services, said that rising US Treasury yields continue to curb gold's recovery, with the 10-year yield hovering near 5.2%. He explained that persistent inflation, concerns about public finances, and heavy government borrowing are weighing on bonds. He added that a stronger dollar is another factor putting downward pressure on gold.
Latest price movements
Spot gold fell 0.1% to $4,137.28 an ounce by 1:14 p.m. in Singapore. Silver dropped 1.1% to $61 an ounce after falling more than 6% last week, its biggest weekly decline since mid-July.
Platinum rose, palladium was steady, and the Bloomberg Dollar Spot Index, a measure of the US currency, climbed 0.3% after rising over the past three weeks.
