Gold meets a quiet October season as rate hike bets rise
Central bank demand supports gold, but the calendar offers little help in October.
What happened
Gold rebounded after an inflation-driven selloff as Fed rate-hike bets rose. Central banks made their highest monthly gold purchases for almost two years in September, according to the Financial Times.
Sources: Investing.com, Financial Times. Details
Why it matters
Higher rate expectations raise the cost of holding gold, which pays no yield. Central bank buying is a steady source of demand on the other side.
What history shows
Gold ended Thursday at 4,170.10, -21.59% from its peak and -3.76% over one month.
Seasonal backdrop
October is among gold's quieter months: the average is +0.13% since 2000, with a gain in only 50% of 26 years. The month so far is -0.40%, close to that average. November has been better, averaging +1.33%, though the last ten year average is -0.42%, so the autumn lift is not reliable lately.
Scenarios
Possible paths and the signs that would point to each. No probabilities. Testable ones are graded on the scorecard.
Central banks dominate
Official buying and a softer dollar lift gold into November.
- Bond yields keep falling
- More central bank purchase data
Rate hike pricing wins
Hot inflation data lifts hike odds and yields, holding gold back.
- Fed hike odds climb
- Real yields rise
What to watch
- Fed commentary on the next hike
- Monthly central bank purchase figures
Sources and method (2)
- Gold rebounds after an inflation-driven selloff as Fed rate-hike bets rise. Investing.com, Oct 15
- Central banks in September made their highest monthly purchases of gold for almost two years, and investors predict a new record price for gold within two years. Financial Times, Oct 15