Gold Spikes at End of September; Too Little, Too Late for Month and Quarter

By Barani Krishnan

Gold experienced a relatively strong performance as September came to a close, but the gains were insufficient to have a significant impact on the month’s or quarter’s overall results.

The most active U.S. gold futures contract settled at $1,757 per ounce on Thursday, marking an increase of $34.10, or 2%. Despite this uptick, gold wrapped up September with a decline of 3.4% and lost 0.8% over the third quarter.

This recent increase in gold prices occurred in the face of rising U.S. Treasury yields. Traders noted that the spike could be driven by renewed concerns about inflation, particularly as oil prices are expected to rise to $90 per barrel from their current levels just below $80.

Additionally, gold’s appeal as a safe haven was bolstered by political uncertainty in the Senate, where Democrats were working to negotiate a deal with Republicans to raise the U.S. debt ceiling and prevent a government shutdown, which could potentially lead to the nation’s first-ever debt default.

"This uptick may also reflect that the gold market had possibly become overly short," commented Ed Moya, an analyst at OANDA.

Moya further indicated that should the rebound in gold continue, sellers might come into play as the price approaches the $1,780 mark. He emphasized that a worsening energy crisis could alleviate some of the downward pressure on gold in the short term, especially as economic recoveries in Europe and Asia are precarious. Fears surrounding rising oil prices could lead to a significant shift in expectations regarding interest rate hikes.