Gold prices rose on Thursday, as they continued to seek to remain above the bearish channel’s middle line on the four-hour chart. Meanwhile, the yellow metal is hovering near the daily pivot point of $4,200, looking to break above it to reclaim resistance levels at $4,253 then $4,303. On the downside, if the price falls beneath the channel’s middle line, it may test support levels near $4,131 then $4,089.
Global financial markets remain focused on key developments shaping the outlook for currencies, interest rates, and energy prices. The U.S. dollar continues to receive support from elevated Treasury yields, while investors have reduced expectations for a Federal Reserve rate hike in October following softer-than-expected inflation data. At the same time, oil prices remain volatile as markets closely monitor developments in U.S.-Iran peace talks and their potential impact on regional supply and global energy markets.
Market Watch
Dollar Supported by Rising Yields
The U.S. dollar remained near its highest level in more than two months during Thursday’s trading session, supported by continued increases in U.S. Treasury yields as investors awaited further economic data to assess the future path of the Federal Reserve’s monetary policy.
The U.S. Dollar Index, which measures the performance of the greenback against a basket of major currencies, rose to around 101.66, its highest level since June 25, extending gains of approximately 2% in September. Meanwhile, the euro fell to around $1.1317, while the British pound declined to approximately $1.32495.
The dollar’s main source of support was the continued rise in U.S. Treasury yields, with the 10-year Treasury yield remaining at elevated levels amid persistent concerns over inflation and higher energy prices. Rising yields have strengthened the appeal of U.S. assets and provided additional support for the dollar.
The move came despite data showing that U.S. inflation in August was weaker than expected, which reduced market expectations for an interest-rate hike at the Federal Reserve’s October meeting. However, inflationary pressures linked to higher energy prices and geopolitical risks continue to support elevated U.S. Treasury yields.
Investors are also monitoring developments in global bond markets after a sharp sell-off in September pushed bond yields higher amid concerns over inflation, fiscal conditions, and rising energy costs. Long-term U.S. Treasury yields have remained elevated, reinforcing the dollar’s support.
Meanwhile, U.S. employment data due on Friday is expected to be closely watched by investors, as it could provide further signals about the strength of the U.S. economy and the Federal Reserve’s monetary policy outlook, with potential implications for the dollar and Treasury yields in the coming weeks
Markets Lower Expectations for a Federal Reserve Rate Hike in October
Investors have lowered their expectations for the U.S. Federal Reserve to raise interest rates at its October meeting, following data showing that U.S. inflation rose less than expected in August, easing some of the pressure on the central bank to continue tightening monetary policy.
Data from the U.S. Department of Commerce showed that the Personal Consumption Expenditures (PCE) price index, the Federal Reserve’s preferred inflation gauge, increased by 0.3% month-on-month in August, below expectations for a 0.4% rise. On an annual basis, the index increased by 3.4%, while core PCE inflation, which excludes food and energy prices, rose by 3.0%.
Against this backdrop, market expectations for a rate hike at the Federal Reserve’s October 27–28 meeting have declined. According to CME FedWatch data, markets were pricing in roughly a 35% probability of a rate hike in October, down from around 70% a week earlier. Meanwhile, the probability of the Fed keeping interest rates unchanged stood at approximately 63%.
Comments from New York Federal Reserve President John Williams also contributed to the shift in market expectations. Williams indicated that there was no urgent need to raise interest rates immediately after the September increase, while leaving open the possibility of another rate hike later in the year.
Despite the decline in expectations for an October rate hike, markets continue to closely monitor inflation, particularly amid elevated energy prices and geopolitical risks. Federal Reserve officials have also emphasized that inflation remains above the central bank’s 2% target, meaning upcoming employment and inflation data will remain important in determining the future path of monetary policy.
In the bond market, the yield on the two-year U.S. Treasury note, which is particularly sensitive to expectations for monetary policy, declined following the inflation data, while longer-term yields remained elevated. This reflects the market’s continued focus on the balance between expectations for less restrictive monetary policy in the near term and persistent inflation concerns over the longer term.
Markets are now expected to focus on U.S. employment data and upcoming inflation figures, alongside comments from Federal Reserve officials, for further signals about the central bank’s decision in October and whether a potential rate hike could be postponed to a later meeting.
Oil Prices Decline as Markets Await the Outcome of U.S.-Iran Peace Talks
Oil prices edged lower in early trading on Thursday as investors awaited the outcome of diplomatic efforts aimed at reaching a peace agreement between the United States and Iran, while also monitoring signs of recovering oil exports from the Gulf region. The developments eased some concerns over crude supply disruptions.
West Texas Intermediate (WTI) futures fell around 0.1% to $90.35 a barrel, while Brent crude edged up approximately 0.1% to $98.15 a barrel in early Asian trading, after both benchmarks gained around $1 a barrel in the previous session.
The market is currently balancing two key factors. On the one hand, uncertainty surrounding the U.S.-Iran peace talks continues to support oil prices due to concerns that supply disruptions in the region could persist. On the other hand, oil exports from the Gulf region have begun to recover, easing some pressure on the supply side.
Goldman Sachs estimated that Gulf oil exports, including less-visible flows, had recovered to around 23.3 million barrels per day in the latest week, broadly in line with the 2025 average. Iranian exports also doubled during September. Saudi Arabia has additionally resumed loading oil tankers from Yanbu port after restarting its East-West pipeline.
On the diplomatic front, Iran said it had received a U.S. response to a proposal aimed at reviving a Gulf ceasefire. However, U.S. President Donald Trump denied reports that Washington was prepared to ease sanctions on Iran and release frozen Iranian funds in exchange for specific steps by Tehran regarding its nuclear program.
Markets are also monitoring U.S. crude inventories. Data from the U.S. Energy Information Administration (EIA) showed that crude inventories increased by 922,000 barrels to 427.3 million barrels in the week ended September 25, compared with analysts’ expectations for a decline of around 264,000 barrels. The unexpected increase added pressure to crude prices.
Despite the limited decline at the start of Thursday’s session, oil prices experienced significant volatility during the day and later rose by more than 2%, supported by China’s decision to suspend exports of oil products, which increased concerns about global fuel supplies. Brent climbed to around $100.09 a barrel, while WTI rose to approximately $92.48 a barrel, according to Reuters.
Meanwhile, markets are awaiting the OPEC+ meeting on Sunday, with expectations that oil-producing countries will keep their November production targets unchanged amid continued uncertainty surrounding global supply and demand.