Gold prices steady as investors weigh potential US rate hike

Gold prices remained stable at the start of Asian trading on Thursday, as investors focused on evaluating the chances of the US Federal Reserve raising interest rates again this year.

Spot gold was little changed at $1,285.31 per ounce as of 00:22 GMT. US gold futures for December delivery also held steady at $1,321.40.

US Treasury prices fell sharply on Wednesday, sending yields higher after a stronger-than-expected purchasing managers' report.

Rising inflationary pressures and an economic rebound appear to be supporting expectations that the Federal Reserve may raise rates again ahead of the crucial midterm elections. According to the FedWatch tool, traders are increasingly betting on a second consecutive policy tightening in late October.

S&P Global reported Wednesday that its preliminary US composite purchasing managers' index, a closely watched gauge of business activity, jumped this month to its highest level since July 2021. The index tracking input prices paid by companies also climbed to a near four-year high.

Although gold is traditionally seen as a hedge during periods of high inflation, rising interest rates tend to reduce its appeal since it does not yield returns.

Meanwhile, a senior Iranian official told Reuters that Iran and the United States remain far apart on how to end their conflict, but diplomatic efforts should continue. This came after the Iranian president told the UN General Assembly that Tehran would never yield to US pressure.

US President Donald Trump welcomed Chinese President Xi Jinping to Washington at the start of a three-day visit.

Among other precious metals, spot silver fell 0.6 percent to $64.08 per ounce, platinum was steady at $1,749.47, and palladium rose 0.2 percent to $1,261.95.