XAU/USD traded around $4,135 per ounce at 9:00 AM Tuesday, down 0.13% since the start of the Asian trading session.
Gold prices remain under pressure from a stronger US dollar and elevated US Treasury yields. However, this pressure is partially offset by waning expectations for a Fed rate hike in October, following weaker-than-expected US employment data for September.
US Yields Remain High; Fed in Focus
The 10-year US Treasury yield rose by approximately 7 basis points to 5.349%—its highest level since April 2002—before retreating to around 5.30%. Meanwhile, the 30-year bond yield touched 5.703%—a high not seen since May 2002—before settling back to around 5.661%.
High yields boost the appeal of fixed-income assets and increase the opportunity cost of holding gold, which offers no yield.
At the same time, expectations for an October Fed rate hike have diminished after September's Non-Farm Payrolls (NFP) report showed weaker-than-expected job growth, alongside downward revisions to data from the previous two months.
According to the CME FedWatch tool, the market currently assigns a probability of approximately 22.7% for a Fed rate hike at the October meeting.
Market attention is now shifting to the minutes of the September FOMC meeting, scheduled for release on Wednesday. The document may offer insights into policymakers' views on the future path of interest rates following the Fed's rate hike last month.
As long as US bond yields and the dollar remain high, gold faces challenges in staging a rally. However, if expectations for further Fed rate hikes continue to decline, the pressure on gold could ease, potentially paving the way for a recovery. For now, XAU/USD is still attempting to hold around $4,100–$4,150, with the market awaiting fresh signals from the Fed before determining its next direction.
