Gold extended its selloff on Thursday, falling to $4,267.43 an ounce as traders raised bets on further Federal Reserve rate hikes. Rising oil prices tied to the Iran war and a bond-market selloff added to the pressure on the metal.
Gold fell for a second straight session on Thursday, dropping 0.5% to $4,267.43 an ounce by 04:40 ET, while gold futures declined 0.4% to $4,301.17 an ounce over the same window.
Gold stays sensitive to the Fed's rate outlook, as investors weigh whether an energy-price shock will keep inflation elevated and force further tightening. Higher interest rates tend to weigh on gold because the metal pays no interest.
Oil climbs as Iran tensions persist
Benchmark Brent oil prices rose back above $100 a barrel, as hopes faded for a quick diplomatic resolution to the Iran war. Iranian President Masoud Pezeshkian told the United Nations that Iran would not allow freedom of navigation through the Strait of Hormuz while a U.S. blockade and sanctions remain in place.
President Donald Trump said his team held productive talks with Iranian envoys on the sidelines of the UN General Assembly, even after earlier warning Iran of severe consequences.
Fed rate-hike odds jump
U.S. business activity expanded at its fastest pace in more than five years in September, adding to worries over sticky, energy-driven inflation alongside resilient growth. As a result, traders now see a 77.5% probability of a rate hike in October, up from 55.4% a week earlier, according to CME FedWatch. The chances of another increase in December stand at over 58%, compared with 41.7% last week.
Bond selloff and the Trump-Xi summit
This hawkish repricing sparked a steep selloff in bond markets, adding further pressure on gold. The benchmark U.S. 10-year Treasury yield logged its biggest jump since April 2025, when markets were reeling from the introduction of sweeping tariffs. At its September meeting, the Fed raised rates by 25 basis points to quell mounting inflation.
Analysts at Britannia Global Markets flagged the importance of a summit between Trump and Chinese President Xi Jinping later that day, arguing that a broader deal or concessions on critical-mineral flows could lift metals, while a breakdown would revive tariff risk. According to Britannia Global Markets: "Watch the communique for metals-specific language."
Source: Investing.com
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