Gold prices opened higher on Monday as market expectations of a US Federal Reserve interest rate increase in October declined following comments from Kevin Warsh (19/10).

Spot gold rose 0.4% to US$4,180.97 per ounce at 7:35 a.m. Singapore time, after falling 0.7% during the previous week.

Gold Prices Rise as Rate Hike Expectations Decline

Market participants reduced their expectations of a quarter-percentage-point interest rate increase, with the probability falling to less than one in five. Warsh's comments were interpreted as supporting a decision to keep interest rates unchanged at the Federal Reserve's meeting next week.

Higher borrowing costs are a challenge for gold because the precious metal does not pay interest. The latest comments from Warsh eased expectations of an interest rate increase that had previously put pressure on the market.

US Inflation and Federal Reserve Policy Affect Gold Prices

Higher US inflation data released the previous week had increased expectations of an interest rate rise and strengthened the US dollar. However, Warsh's comments halted the dollar's advance.

The change in market expectations came as investors assessed the Federal Reserve's next interest rate decision. The probability of a quarter-percentage-point increase in October subsequently fell to less than 20%.

Gold Remains Above US$4,000 Support Level

Gold has remained above the key support level of US$4,000 per ounce since August, supported by its status as a safe-haven asset. This support followed a decline triggered by war that pushed the commodity into a bear market in early 2026.

Despite remaining above the key support level, gold is still down approximately one-fifth since the US-Iran conflict began in late February.

Silver, Platinum and Palladium Prices Also Rise

Spot silver rose 0.6% to US$57.33 per ounce at 7:35 a.m. Singapore time. Platinum and palladium prices also increased during the session.

The Bloomberg Dollar Spot Index, a benchmark for the US currency, was little changed after declining 0.3% during the previous week.

PHOTO: MAGNIFIC

This article was created with AI assistance.

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