Gold extended its previous session's sharp selloff on Thursday, falling further as traders priced in growing odds of more Federal Reserve interest rate hikes this year. Rising oil prices and a jump in Treasury yields added to the pressure on the metal.
Gold slipped further on Thursday, extending a sharp selloff from the previous session. By 09:31 ET (13:31 GMT), spot gold had fallen 0.3% to $4,275.09 an ounce, while gold futures declined 0.2% to $4,310.60 an ounce.
Rate-hike odds climb sharply
The metal stays sensitive to the Fed's rate outlook, as investors weigh whether an energy-price shock will keep inflation elevated and force further policy tightening. Higher rates weigh on gold because the metal pays no interest.
Traders now see a roughly 77.5% probability of a rate hike in October, up from 55.4% a week ago, according to CME FedWatch. The chances of another borrowing-cost increase in December now stand at over 58%, compared with 41.7% last week. At its September meeting, the Fed raised rates by 25 basis points, citing a desire to quell mounting inflation.
Oil climbs as Iran tensions persist
Benchmark Brent oil prices have risen back above $100 a barrel, as hopes faded for an imminent 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 had held constructive talks with Iranian envoys on the sidelines of the United Nations General Assembly gathering, although he earlier threatened Iran with annihilation. Meanwhile, data showed U.S. business activity expanded at its fastest pace in more than five years in September, adding to the case for resilient growth alongside energy-fueled inflation pressure.
Bond selloff adds to the pressure
This hawkish repricing sparked a steep selloff in bond markets, placing further downward 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 Trump's Liberation Day tariffs.
Analysts at Britannia Global Markets flagged the importance of a summit between Trump and Chinese President Xi Jinping the same day, arguing that a broader deal or concessions on critical-mineral flows could lift metals, while a breakdown would revive tariff risk. According to Investing.com: "Watch the communique for metals-specific language," they said.
Source: Commodities & Futures News
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