Gold muted as investors weigh chances of further Fed rate hikes

Gold prices were muted in early Asian trade on Thursday, with investors focussed on the prospect of further Federal Reserve interest rate hikes this year.

FUNDAMENTALS

Spot gold was flat at $4,285.31 per ounce, as of 0022 GMT. US gold futures for December delivery were little changed at $4,321.40.

US Treasury prices dropped on Wednesday, pushing yields sharply higher after a stronger-than-expected purchasing managers' report.


Mounting inflation pressures and a strengthening economy appear to be pushing the Fed towards a rate hike on the eve of critical national elections, with traders piling into bets on a second straight policy tightening in late October.

A closely watched measure of US business activity, S&P Global's flash US Composite PMI Output Index, jumped this month to its highest since July 2021, S&P Global reported. The survey's measure of prices paid by businesses for inputs surged to a nearly four-year high.

While gold is widely regarded as an inflation hedge, rising interest rates tend to diminish its appeal relative to interest-bearing investments.

Iran and the United States remain far apart on how to end their war but diplomacy must continue, a senior Iranian official told Reuters, after Iran's president told the UN General Assembly that Tehran would never surrender to US pressure.

US President Donald Trump welcomed Chinese President Xi Jinping to Washington for a three-day visit where the superpowers' tensions over trade, technology and Tehran will play out against a backdrop of pomp and ceremony.

Among other metals, spot silver fell 0.6% to $64.08 per ounce, platinum steadied at $1,749.47 and palladium rose 0.2% to $1,261.95.

DATA/EVENTS (GMT)

0030 Japan S&P Global Mfg PMI, Comp Op, SVC PMI Flash SA Sep

0645 France Business Climate Mfg, Overall Sep

0800 Germany Ifo Business Climate, Curr Conditions, Expectations New Sep

1230 US Initial Jobless Clm 19 Sep, w/e

1400 US New Home Sales-Units Aug