Gold steadied near $4,140 an ounce as traders weighed the impact of a stronger dollar and higher Treasury yields on the Federal Reserve's path for interest rates. The dollar neared its highest level this year on Monday as the euro weakened after a bond selloff in France that had traders on alert for signs of regional contagion. A stronger greenback is typically a headwind for commodities priced in the currency.
Treasuries came under renewed pressure, pushing longer-dated yields to multi-decade peaks as bonds extended their slide. Further inflationary pressure was seen in an Institute for Supply Management report that showed cost pressures in US services last month grew the most in more than four years. Despite the inflationary indicators, Fed officials have been talking down the chance of an imminent rate hike, and traders are pricing in a roughly one-in-four chance the central bank will raise borrowing costs at its meeting this month.
Minutes of the Fed's September meeting, where rates were raised for the first time in three years, are due Wednesday. Higher rates are typically negative for bullion, relative to yield-bearing assets like Treasuries. Gold fell more than 6% last month on concerns over energy-driven inflation as well as the prospect for higher US rates and the strengthening dollar.
It's down more than a fifth since the US-Iran conflict began in late February. Spot gold was little changed at $4,139.06 an ounce at 7.30 a.m. in Singapore. Silver was steady at $61.05 an ounce.
Platinum edged lower, while palladium rose marginally. The Bloomberg Dollar Spot Index, a gauge of the US currency, was steady after rising for four weeks.
Source: Bloomberg Markets · Summarized by HeadlinesBriefing