GLD rises 0.55% to $382.94 as Treasury yields retreat
Lower yields and Fed Vice Chair Philip Jefferson's comments eased expectations of an October rate rise, while France's fiscal troubles added to haven demand
Published
Gold rose 0.5% to $4,178.10 an ounce on Thursday, as US Treasury yields pulled back from 2002-level highs and investors sought havens amid concerns over France's fiscal outlook.
Federal Reserve Vice Chair Philip Jefferson said the central bank would let incoming data guide its next move and was in no rush to act, repeating a "more time" framing he has used in recent days. Traders have cut the odds of an October rate increase to 50-50, from 70%, after Jefferson and New York Fed President John Williams both signaled no urgency on further hikes.
Not all policymakers agree. Fed Governor Lorie Logan said more rate increases are needed as inflation lingers, even as the odds of an October move were cut. Minneapolis Fed President Neel Kashkari said September's rate rise showed the Fed's resolve on inflation. Richmond Fed President Thomas Barkin, Boston Fed President Susan Collins and Kansas City Fed President Jeffrey Schmid backed the September hike but gave no signal on October.
France's fiscal troubles have also pushed investors toward gold. ECB President Christine Lagarde called France's 120% debt load serious, with no path to bring it down. On Wednesday, France's bond risk premium climbed to 124 basis points, while Italy's topped 100 basis points for the first time since March.
Gold's advance extends a pattern that has kept rate-hike odds split rather than resolved. The retreat in long-end yields after weeks of climbing removes some of the pressure that higher real rates had placed on bullion, while France's fiscal stress adds a second haven driver on top of the Fed uncertainty, a combination different from the yield-only story that dominated gold's moves through most of September.