Gold inches up as October Fed rate hike prospects fade

Gold prices inched higher during early Asia trade on Monday as recent soft economic data lowered expectations of a Federal Reserve rate hike in October.

Fundamentals

Spot gold was up 0.3% to $4,153.32 per ounce by 0022 GMT. US gold futures for December delivery rose 0.5% to $4,182.40.

Data on Friday showed that US job growth slowed more than expected in September and the nonfarm payrolls count for the prior two months was revised sharply lower, almost taking another interest rate hike from the Fed this month off the table.


Fed policymakers were already leaning against delivering a second straight rate hike this month to give them time to sift through more economic data before pulling the trigger again, and a cooler than expected job market report Friday leaves that approach intact.

The US central last month raised its benchmark overnight interest rate by 25 basis points to the 3.75%-4.00% range.

Rising rates often pressure gold prices, as holding the non-interest-bearing asset becomes less attractive.

On the geopolitical front, Yemen's Saudi-backed, internationally recognised government said it was launching a major military campaign to recapture all areas of the country controlled by the Iran-backed Houthis.

Among other metals, spot silver gained 1% to $60.97, platinum added 0.4% to $1,705.70 and palladium firmed 0.7% to $1,176.00.

Data/Events (Gmt)

0030 Japan S&P Global Comp Op Final SA Sep

0030 Japan S&P Global SVC PMI Final SA Sep

0750 France S&P Services, Composite PMI Sep

0755 Germany S&P Services PMI Sep

0755 Germany S&P Composite Final PMI Sep

0800 EU S&P Services, Composite Final PMI Sep

0830 UK S&P GLOBAL PMI: COMPOSITE - OUTPUT Sep

0830 UK Reserve Assets Total Sep

1345 US S&P Global Comp, Svcs PMI Final Sep

1400 US ISM N-Mfg PMI Sep