Gold prices strengthened on Thursday, trading near $4,175 an ounce, after softer-than-expected US inflation data tempered expectations of a Federal Reserve rate hike in October. However, gains were capped by rising Treasury yields and a firmer US dollar.
US inflation increased by less than anticipated in August, and the previous month’s figures were revised lower, easing concerns about persistent price pressures. Following the data, markets lowered the implied probability of an October rate hike to under 40%, while still pricing in close to a 90% chance of an increase in December.
At the same time, yields on 10-year US Treasuries climbed to their highest level since 2002, increasing the opportunity cost of holding non-interest-bearing assets such as gold. The stronger dollar added further headwinds for the metal.
Investors are now focused on Friday’s September nonfarm payrolls report, which is expected to show a net employment gain of around 90,000 jobs, as well as on forthcoming remarks from Federal Reserve officials for clues on the policy outlook. Meanwhile, US–Iran talks on reopening the Strait of Hormuz and resolving the conflict in the Middle East remain at an impasse.
