Gold nudges lower as dollar holds firm
By Ashitha Shivaprasad
Oct 5 (Reuters) - Gold prices eased on Monday as the US dollar firmed, though losses were limited after recent soft economic data sharply reduced expectations of a Federal Reserve rate hike in October.
Spot gold fell 0.3% at $4,131.61 per ounce by 0422 GMT. US gold futures for December delivery lost 0.1% to $4,159.30.
The US dollar index .DXY rose 0.6%, making dollar-denominated metals more expensive for holders of other currencies. USD/
US job growth slowed more than expected in September, and the nonfarm payrolls count for the prior two months was revised sharply lower, data showed on Friday.
"The softer labour market data has helped dial back October Fed hike expectations, which is providing gold some support. But the market is still treating the Fed’s broader hiking cycle as intact even if a pause occurs in October," said Tim Waterer, chief market analyst at KCM Trade.
Traders now see an 18% probability of a Fed rate hike in October, while still pricing in an 88% chance of an increase in December, according to the CME FedWatch Tool.
The US central bank last month raised its benchmark overnight interest rate by 25 basis points to the 3.75%-4.00% range, its first rate increase in three years.
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.
"Middle East developments will continue to matter for gold, particularly through their impact on oil prices and the broader inflation outlook. Volatility is likely to remain elevated while oil, yields and Fed expectations stay in flux," said Waterer. US/
Oil prices slipped as rising crude exports from the Middle East and G7 nations' release of oil added to supplies, offsetting concerns about further damage to Gulf oil. O/R
Among other metals, spot silver gained 0.9% to $60.94, platinum was up 0.5% to $1,706.18 and palladium fell 0.2% to $1,165.40.