Gold slips as traders weigh smaller rate cuts

Gold slipped despite sustained tensions in the Middle East, with stronger-than-expected US jobs data hollowing out expectations for further half-point interest-rate cuts from the US Federal Reserve.

Bullion was down as much as 0.5% to trade near $2,640 an ounce, under pressure from rising US 10-year Treasury yields, as investors pared bets on a 50 basis-point cut in November. Friday’s labor market report showed employers added the most jobs in six months in September — topping all estimates. Lower rates tend to benefit the metal, as it does not pay interest.

In the Middle East, investors were watching for Israel’s response to Iran’s missile attack last week amid concerns that the retaliation may mark a further escalation in the year-long conflict. Over the weekend, Israel sent troops back into the northern Gaza Strip to confront Tehran-backed Hamas, while also stepping up air strikes in Beirut against Hezbollah, another proxy.

Gold has rallied by more than a quarter this year — hitting a series of records — with recent gains fueled by rate-cut optimism. The metal has also been boosted by robust official-sector purchases and haven demand, although a release from China’s central bank on Monday showed that it hadn’t expanded its holdings.

Spot gold was 0.4% lower at $2,642.93 an ounce at 2:43 p.m. in Singapore, below the all-time high of $2,685.58 in September. The Bloomberg Dollar Spot Index was steady, after rising by 1.6% last week. Silver and platinum fell, while palladium edged up.