Gold recovered from its biggest weekly drop since June, as rising debt risks in Europe boosted the appeal of safe-haven assets while investors continue to weigh the outlook for US rates.
Spot bullion rose 0.5% to trade near $4,160 an ounce — after falling 3.4% last week — as policy gridlock in France sparked a selloff in the region’s more vulnerable debt.
Prices got a short-term boost last week after US nonfarm payrolls increased by 29,000 in September, below all estimates in a Bloomberg survey of economists. That eased the near-term pressure on the Federal Reserve to raise borrowing costs, but prices came back under pressure by the close of trading on Friday, as the risks posed by high oil prices continued to weigh on the outlook.
The market is pricing in around a 20% chance of a hike in October, down from 70% a week ago. Higher rates typically reduce the appeal of the precious metal relative to yield-bearing assets like Treasuries.
Inflationary pressures haven’t gone away, though. Global benchmark Brent oil remains above $100 a barrel, and some rate tenors are near their highest in more than two decades. Treasury Secretary Scott Bessent downplayed concerns over high borrowing costs, saying they were in line with global trends.
Gold fell more than 6% last month on concerns over energy-driven inflation, the prospect for higher US rates and a strengthening dollar that’s made the precious metal more expensive for many buyers. Fed officials have been talking down the chance of an imminent hike, however. Minutes of the Fed’s September meeting, where rates were raised for the first time in three years, are due mid-week, providing clues on the path forward.
“Bullion’s recovery remains constrained by elevated Treasury yields, with the 10-year yield holding around 5.2% as persistent inflation, fiscal concerns and heavy government borrowing continue to pressure bonds,” said Manav Modi, a commodity analyst at Mumbai-based Motilal Oswal Financial Services Ltd. said. The stronger dollar is another headwind, he said.
Spot gold rose 0.4% to $4,158.53 an ounce as of 11:48 a.m. local time. Silver climbed 2.2% to $61.68 an ounce after falling more than 6% last week, the most since mid-July. Platinum and palladium advanced. The Bloomberg Dollar Spot Index, a gauge of the US currency, rose 0.2%, following three weeks of gains.
(By Wendy Wells, Preeti Soni and Mark Burton)
