Gold edges up as October rate hike bets ease, stronger dollar cap gains

By Reuters News
Gold bangles are displayed inside a jewellery store in the old quarters of Delhi, India, May 11, 2026. REUTERS/Bhawika Chhabra

By Elizaveta Zhuravleva

- Gold prices climbed on Monday as continued concerns of rising government debt and easing expectations of an immediate Federal Reserve rate hike lent support, although a firmer dollar limited gains.

Spot gold rose 0.6% to $4,165.49 per ounce by 0901 GMT. US gold futures for December delivery rose 0.8% to $4,194.60.

"We continue to view rising government debt levels as a structural tailwind for the yellow metal," said UBS analyst Giovanni Staunovo, noting the bullion is holding up relatively well despite headwinds from higher interest rates and a stronger US dollar.

Last month, total US debt topped $40 trillion for the first time, drawing fresh warnings that a fiscal crisis is brewing.

In focus now are the minutes for the September Federal Open Market Committee meeting, which could help investors gauge the central bank's future monetary policy after the central bank last month delivered its first rate increase in three years.

Expectations of Fed tightening its policy this month eased sharply after US job growth slowed more than expected in September, and the nonfarm payrolls figures for the prior two months was revised significantly lower, data showed on Friday.

While traders now only see an 18% probability of a Fed rate hike in October, they are still pricing in a 69% chance of an increase in December, according to the CME FedWatch Tool.

Meanwhile, the US dollar index .DXY rose 0.22%, making dollar-denominated metals more expensive for holders of other currencies. USD/

Oil prices fell on Monday as rising Middle East crude exports and a release of oil stocks by the Group of Seven nations boosted supplies, somewhat easing inflation concerns.O/R

Gold is traditionally considered an inflation hedge, but tends to lose its appeal to yield-bearing assets in a high-interest-rate environment.

On the geopolitical front, Yemen’s Saudi-backed, internationally recognised government said on Sunday it was launching a major military campaign to recapture all areas controlled by the Iran-backed Houthis.

Among other metals, silver jumped 2.2% to $61.7252 per ounce, platinum gained 2.1% to $1,733.50 and palladium added 1.3% to $1,182.50.

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