Gold edges higher as softer US inflation cools October rate-hike bets
Gold edged higher on Thursday after a softer-than-expected US inflation report pared expectations of a Federal Reserve rate increase this month, with traders looking to Friday's September nonfarm payrolls report for further direction. Spot gold rose 0.5% to $4,175.19 per ounce by 0417 GMT, starting the month on a positive note after a fall of more than 6% in September. US gold futures for December delivery gained 0.4% to $4,204.80.
Data on Wednesday showed US inflation rose less than expected in August, while price pressures for the prior month were revised lower. The report reduced expectations of a rate hike in October, with markets pricing a 38% chance, down from 45% before the release, though traders still see a 97% probability of an increase in December. Higher interest rates reduce the appeal of gold, which does not pay interest.
Ilya Spivak, head of global macro at Tastylive, said incoming data would be important in showing how the market deals with it and shapes rate-hike expectations, adding that the market was dealing with a lot of conflicting forces. The crucial US nonfarm payrolls report for September is scheduled for release on Friday.
Limiting gains for gold, the US dollar held near a two-month high, and a stronger greenback makes dollar-priced metals costlier for holders of other currencies. Bart Melek, global head of commodity strategy at TD Securities, said that while all of gold's September losses were unlikely to be recovered, there were reasons to believe that the worst of the correction was over for now and that there was a case for higher prices.
Among other precious metals, spot silver rose 1.2% to $61.11, platinum climbed 0.7% to $1,717.35 and palladium firmed 0.3% to $1,207.12. On the geopolitical front, Iran said on Wednesday it had received a US response to its latest proposal to resurrect the collapsed ceasefire in the Gulf, days after US President Donald Trump said he had rejected it.
