Gold prices steadied on Thursday after sliding to a two-month low in the previous session, as investors assessed the likelihood of another US Federal Reserve interest rate hike before year-end. Spot gold was little changed at $4,116.67 per ounce by 0625 GMT. On Wednesday, bullion prices touched their lowest level since August 5 as a firmer dollar and higher US Treasury yields weighed on the market. US gold futures were flat at $4,140.70. "The short-term investment case for gold remains challenged... We would need to see a break above $4,275 to become more constructive on the near-term upside," said Chris Weston, head of research, Pepperstone. "If markets begin treating rising long-end yields as a reflection of sovereign credit and fiscal risk rather than stronger economic fundamentals, gold could start to diverge positively from bond yields and the debasement trade could return with greater force." Fed policymakers were divided last month over the rationale for raising interest rates, with "some participants" seeing a hike as needed to keep the impact of energy and other price shocks at bay, but a more hawkish core viewing it as necessary to guard against emerging demand-driven inflation, minutes showed. Traders see only a 19% chance of a rate hike later this month, but are pricing in an 86% likelihood of an increase in December, according to CME's FedWatch tool. Higher rates diminish the appeal of non-yielding gold. The global economy is under threat from persistently high energy prices, record public debt and risks from the AI investment boom, International Monetary Fund Managing Director Kristalina Georgieva warned, urging governments to implement protective fiscal and monetary policy measures. Among other metals, spot silver fell 1.9% at $59.01, platinum added 1.6% to $1,657.18 and palladium climbed 1.1% to $1,136.80. "We see silver on a downward trajectory given the deteriorating chart patterns and expect a test of the 2026 lows in the mid to high $50s," Marex analyst Edward Meir said in a note.
