Gold rebounds from two-month low

Spot gold rose 0.5% to $4,132.66, while US gold futures for December delivery gained 0.4% to $4,157.60. The precious metal had fallen to its lowest level since August 5 in the previous session, pressured by a stronger dollar and rising US Treasury yields. A weaker dollar supported demand for gold, although elevated bond yields and expectations of restrictive Fed monetary policy continued to weigh on prices.

Minutes from the Fed’s September meeting showed that officials remained open to further interest rate hikes amid inflation risks, while markets priced in an 18% probability of an October rate increase and an 80% probability in December. Chris Weston, Head of Research at Pepperstone, said gold’s near-term outlook remains challenging and that a break above $4,275 would be needed to support a stronger bullish outlook. According to Weston, growing perceptions that rising long-term bond yields reflect government debt and fiscal policy risks could restore gold’s appeal as a hedge against currency depreciation. Investors remain focused on the Fed’s interest rate path, the dollar’s direction and developments in the US Treasury market.