Gold steadies as softer US inflation offsets pressure from rising Treasury yields
Investors await key US jobs data after lower-than-expected inflation eased expectations of an October Federal Reserve rate hike
London: Gold prices were little changed on Thursday as a softer-than-expected US inflation report reduced expectations of a near-term Federal Reserve interest rate increase, although higher Treasury yields and a stronger US dollar limited gains.
Spot gold was steady at $4,155.60 an ounce by 0830 GMT, while US gold futures for December delivery were unchanged at $4,185.50. The precious metal lost more than 6 per cent in September.
The benchmark 10-year US Treasury yield climbed to its highest level in more than two decades, increasing the opportunity cost of holding non-yielding assets such as gold. A stronger dollar also made gold more expensive for holders of other currencies.
Nitesh Shah, commodity strategist at WisdomTree, said the latest inflation figures had provided some support for bullion.
"Yesterday's inflation numbers were helpful for gold in the sense that they weren't as strong as the market had expected and therefore helped dial down some of the expectations for rate hikes," Shah said.
He added: "This bond market volatility does seem to point to gold being possibly a better anti-fragile hedge. And I could see more interest in gold as a result of its role as an instrument of stability in terms of uncertainty and chaos."
Data released on Wednesday showed that US inflation rose less than expected in August, while price pressure figures for the previous month were revised lower.
Following the data, markets reduced the likelihood of a Federal Reserve rate increase in October to 37 per cent, down from 45 per cent before the release. However, traders still see an 89 per cent probability of a rate rise in December.
Investors are now awaiting the US nonfarm payrolls report for September, due on Friday, along with comments from Federal Reserve policymakers that could provide further signals on the interest-rate outlook.
In geopolitical developments, Iran said on Wednesday it had received a response from the United States to its latest proposal aimed at reviving a ceasefire in the conflict involving Iran, days after US President Donald Trump said he had rejected the proposal.
Among other precious metals, silver was little changed at $60.40 an ounce, platinum fell 0.4 per cent to $1,699.61, and palladium dropped 1.9 per cent to $1,181.30.