Market Overview

On Thursday, spot gold edged up 0.5% to close at $4,177.25 per ounce, while gold futures inched 0.1% to $4,207.55 per ounce. The modest advance was largely neutralised by a surge in oil prices and a rally in U.S. Treasury yields.

U.S. Treasury Yield Movement

The benchmark 10‑year Treasury yield declined 6.5 basis points, ending the session at 5.246%, and the 30‑year yield slipped 2.3 basis points to 5.616%. This reversal halted a steep sell‑off that had previously pushed longer‑term yields toward 20‑year highs.

Economic Data Highlights

The Institute for Supply Management (ISM) reported that its prices index rose to 77.9 in September, up from 71.1 in August, approaching the 78.3 level seen in March at the start of the U.S.–Iran conflict. Meanwhile, the ISM’s overall manufacturing activity gauge expanded for the ninth consecutive month.

Fed Rate Outlook

Investors are now looking ahead to Friday’s non‑farm payrolls report for clues on the Federal Reserve’s future rate path. Earlier indicators suggested stronger U.S. growth, a resilient labour market and cooling inflation, prompting a sharp reduction in market bets on an October Fed rate hike.

Gold’s Recent Performance

Gold experienced a more than 6% decline in September, marking its worst monthly performance since June, after the Fed’s first rate increase since 2023 and signals that further tightening could be required. Global bond yields also rose during the month as concerns over rising government debt and fiscal deficits lifted term premiums, increasing the opportunity cost of holding non‑interest‑bearing gold.

HSBC analysts noted that liquidation following the Iran conflict, higher oil, inflation and yields had initially boosted gold in late summer, but the September FOMC rate hike, expectations of additional hikes and rising oil prices pushed gold back onto the defensive.

Oil Price Surge and Geopolitical Context

Brent crude futures for December delivery climbed 4.3%, settling at $102.21 per barrel. The price jump followed a Wall Street Journal report that the United States was dispatching a third aircraft‑carrier strike group and additional Marine Corps vessels to the Middle East, potentially adding 9,000 to 10,000 troops by the end of November.

President Donald Trump told reporters he needed to “make a decision” on Iran, stating, “They’ll either sign a very fair deal, or they won’t exist any longer.” He also asserted that the United States controls the Strait of Hormuz and claimed that current oil flow through the strait exceeds any historical level.

Outlook

The interplay of a modest gold rally, falling Treasury yields, rising oil prices and heightened geopolitical tension creates a mixed short‑term market environment, with upcoming U.S. employment data likely to shape further expectations for Federal Reserve policy.