Gold climbed Tuesday as long-dated Treasury yields pulled back from multi-decade highs, helping bullion recover from a two-month low reached during Asian trading. Silver rose alongside it.
Bonds drove the bounce. The 10-year Treasury yield had climbed to 5.35% on Monday, while the 30-year reached 5.70%, levels last seen in 2002.
Both eased Tuesday, giving precious metals some breathing room. Higher yields make non-yielding gold less attractive, so even a modest pullback helped reverse some of the earlier selling.
Oil added another tailwind, falling below $100 a barrel after G7 nations agreed to release emergency stockpiles.
The Fed trade shifted
September nonfarm payrolls rose by just 29K, while July and August were revised down by a combined 60K jobs. The weaker labor picture sharply reduced expectations for an October rate hike.
Traders now put the odds of no change at the Oct. 28 meeting near 78%, up from 36% a week earlier. But the market hasn't abandoned the prospect of another increase altogether.
Futures still price roughly an 87% chance of a Fed increase by year-end. Inflation remains the complication, with the ISM services prices index climbing to 74, its highest reading since July 2022.
Big buyers haven't backed off
US-listed gold ETFs attracted roughly $3.8B in September, while China added 20 tonnes to its reserves in August. That steady institutional and central bank demand has helped cushion gold from the recent jump in rates.
European fiscal concerns have added another layer of support. Political uncertainty in France has pushed French bond yields higher, while the US dollar's retreat Tuesday removed another headwind for bullion.
Gold is still coming off a 6% September decline and has yet to break decisively out of its recent range. Wednesday's Federal Reserve meeting minutes and Friday's preliminary October consumer sentiment reading are the next tests.
Until long-dated Treasury yields break their uptrend, gold's rebound remains as much a bond market story as a precious-metals one.
