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Gold
Source: Newsmaker.id
Gold prices remained relatively flat during early Asian trading on Tuesday (Oct. 6), as pressure from a strengthening US dollar and high Treasury yields offset diminished expectations for a Federal Reserve interest rate hike. Gold held steady around the US$4,140 level, but upside potential appeared limited as the bond market came under renewed pressure.
US Treasury yields have been a primary factor capping gold's gains. The 10-year yield briefly climbed to around 5.35%—its highest level since 2002—before edging lower. Meanwhile, the 30-year yield briefly breached the 5.70% mark, a level not seen since 2002. Rising yields make interest-bearing assets like bonds relatively more attractive compared to gold, which offers no yield.
However, the pressure on gold was counterbalanced by shifting expectations regarding Fed policy. September's Non-Farm Payrolls (NFP) data—showing a gain of only 29,000 jobs alongside downward revisions for the previous two months—indicated that the US labor market is losing momentum. Consequently, the probability of a Fed rate hike in October dropped to approximately 22.7%, down sharply from around 70% the previous week.
Market attention has now shifted to the FOMC minutes due for release on Wednesday. The minutes from the September meeting will provide clearer insight into the debates among Fed officials following the central bank's rate hike at the prior meeting. If the minutes reveal growing concerns about labor market weakness, the dollar and yields could soften, potentially allowing gold to rebound. Conversely, a hawkish tone could reignite selling pressure.
Newsmaker Analysis:
Gold remains in a consolidation phase, facing significant short-term downside risk as long as Treasury yields and the dollar remain elevated. A rebound remains possible if the market becomes increasingly convinced that the Fed will hold interest rates steady in October. However, for a stronger rally, gold requires confirmation in the form of falling yields and a shift in expectations regarding Federal Reserve policy. The FOMC minutes will serve as the key catalyst determining the next direction.
Source: Newsmaker.id