Gold prices steadied on Thursday after sliding to a two-month low in the previous session, as investors assessed the likelihood of another interest rate hike by the US Federal Reserve before year-end.
Spot gold was little changed at around $4,116–$4,130 per ounce in early trading. On Wednesday, bullion had touched its lowest level since 5 August, pressured by a firmer US dollar and higher Treasury yields. US gold futures also traded broadly flat near $4,140–$4,150.
“The short-term investment case for gold remains challenged… We would need to see a break above $4,275 to become more constructive on the near-term upside,” said Chris Weston, Head of Research at Pepperstone. He added that if markets begin treating rising long-end yields as a reflection of sovereign credit and fiscal risk rather than stronger economic fundamentals, gold could start to diverge positively from bond yields.
Minutes from the Federal Reserve’s September meeting showed policymakers were divided over the rationale for raising rates. Some participants viewed a further hike as necessary to contain the impact of energy and other price shocks, while a more hawkish group saw it as essential to guard against emerging demand-driven inflation.
Traders currently assign only an 18–20% probability to a rate increase later this month, but price in an 80–86% likelihood of a hike in December, according to the CME FedWatch tool. Higher interest rates typically diminish the appeal of non-yielding assets such as gold.
Separately, International Monetary Fund Managing Director Kristalina Georgieva warned that the global economy faces threats from persistently high energy prices, record public debt levels, and risks associated with the AI investment boom, urging governments to adopt protective fiscal and monetary policy measures.
Overall, gold remains in a holding pattern as market participants continue to monitor Federal Reserve signals, the strength of the dollar, and movements in Treasury yields.
