Gold Steadies After September's 6% Drop as PCE Data Cools Rate Bets
Gold prices stabilized following a steep September decline as softer U.S. PCE inflation data reduced expectations for further Federal Reserve rate hikes.
Gold prices held relatively steady at the start of October after enduring a 6% slide in September, one of the metal's sharpest monthly retreats in recent memory, as traders weighed fresh inflation data against the Federal Reserve's policy trajectory.
The latest U.S. Personal Consumption Expenditures index — the Fed's preferred measure of inflation — came in softer than many market participants had anticipated, prompting a pullback in bets that policymakers would deliver additional interest rate increases in the near term. Lower rate-hike expectations tend to ease pressure on non-yielding assets like gold, which had been battered through much of September as the dollar and Treasury yields surged.
Read more BofA Warns 'AI Put' Now Drives Stock Market More Than Bond Yields →
Gold is acutely sensitive to real interest rates and dollar strength. When borrowing costs rise, the opportunity cost of holding bullion increases, making the metal less attractive relative to yield-bearing instruments. September's steep selloff reflected those dynamics playing out aggressively as the Fed maintained its higher-for-longer rhetoric.
The stabilization in prices suggests some traders see a near-term floor forming after the heavy monthly losses, though the broader outlook for gold remains contingent on incoming economic data and any signals from Fed officials about the pace of future policy decisions. Analysts broadly caution that a sustained recovery in gold would likely require clearer evidence that the Fed's tightening cycle has peaked.
Continue reading at All News.
