Gold prices moved lower on Thursday, extending declines from the previous session as investors assessed higher oil prices, rising U.S. Treasury yields and the outlook for Federal Reserve interest rates.
At 04:40 ET, spot gold was down 0.5% at $4,267.43 an ounce, while gold futures declined 0.4% to $4,301.17 an ounce.
Gold markets have remained sensitive to changes in interest rate expectations as investors consider the potential impact of energy prices on inflation and monetary policy. Higher interest rates can reduce the relative appeal of non-interest-bearing assets such as gold.
Brent crude returned above $100 a barrel as markets continued to monitor diplomatic developments involving the United States and Iran.
Oil Prices and U.S.-Iran Developments Remain in Focus
Iranian President Masoud Pezeshkian told the United Nations that Iran would not permit freedom of navigation through the Strait of Hormuz while the U.S. blockade and sanctions remained in place.
U.S. President Donald Trump had previously said his administration held “very good” talks with Iranian representatives on the sidelines of the United Nations General Assembly. He had also separately threatened Iran with “annihilation” if hostilities escalated.
Oil prices subsequently moved higher as traders continued to assess the prospects for an agreement and potential changes to shipping conditions through the Strait of Hormuz.
Investors were also assessing U.S. business activity figures, which indicated that activity expanded at its fastest pace in more than five years in September.
Markets Increase Expectations for Further Fed Rate Rises
According to the CME FedWatch figures supplied, market pricing indicated an approximately 77.5% probability of a Federal Reserve interest rate increase in October, compared with 55.4% a week earlier.
The market-implied probability of another rate increase in December stood above 58%, compared with 41.7% a week earlier.
These figures reflect market pricing and can change as new economic information becomes available. They do not represent confirmed future decisions by the Federal Reserve.
The shift in rate expectations coincided with a decline in U.S. Treasury prices and an increase in yields. The benchmark 10-year Treasury yield recorded its largest one-day increase since April 2025.
The Federal Reserve raised its benchmark interest rate by 25 basis points at its September meeting as policymakers assessed inflationary pressures.
Higher bond yields can affect gold by increasing the potential return available from interest-bearing assets relative to the non-yielding precious metal.
Trump-Xi Meeting Adds Trade Policy to Metals Outlook
Investors were also preparing for a meeting between Trump and Chinese President Xi Jinping, with trade and critical-mineral supplies among the issues being monitored by metals markets.
Analysts at Britannia Global Markets said a “broader deal or concessions on critical-mineral flows” could support metals prices, while “a breakdown would revive tariff risk.”
“Watch the communique for metals-specific language,” the analysts said.
The comments represent Britannia Global Markets’ assessment of potential outcomes from the meeting and their possible implications for metals. The supplied information did not establish that either scenario would occur.