Gold Steadies as Expectations of Federal Reserve Rate Cut Fade

(Bloomberg) — Gold held steady as traders pared expectations of Federal Reserve interest-rate cuts in the wake of stronger-than-expected US jobs data.

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Bullion traded near $2,660 an ounce, continuing to tread water below a recent record high. Key US Treasury yields are back at 4% after Friday’s blowout US jobs numbers undercut chances of a big rate reduction by the Fed in November. Money markets now price less than a quarter-point move next month.

Lower rates are often seen as bullish for non-interest bearing gold. US inflation data due later this week could offer further clues on the rate path. Fed officials including Alberto Musalem are also due to speak at events later Monday.

Gold has rallied about 29% this year — hitting a series of all-time highs — with recent gains fueled by rate-cut optimism. The metal has also been supported by robust purchases by central banks as well as haven demand amid ongoing conflicts in Ukraine and the Middle East.

Meanwhile, money managers cut their net-bullish wagers on gold to a three-week low as of Oct. 1, Commodity Futures Trading Commission data showed on Friday.

“Gold and silver saw net selling as traders booked profit amid two tired-looking metals following the recent run-up in prices,” Ole Hansen, head of commodity strategy at Saxo Bank A/S, wrote in a report. “In gold, it is worth noting that both long and short positions were reduced as recent short sellers feared a geopolitical spike while long-held longs continued to book profit.”

Spot gold edged up 0.1% to $2,657.12 an ounce by 12:19 p.m. in London. The Bloomberg Dollar Spot Index was also steady, while the US 10-year Treasury yield rose. Palladium gained, while platinum and silver fell.