Gold falls as Kooijman sees oil likely reinforcing hawkish rate expectations

Strong steel spreads support BlueScope as housing strains lumber

The 0034 GMT market update reported that gold declined in early Asian trade. Spot gold was down 0.2% at $4,117.90 an ounce. Bas Kooijman of DHF Capital S.A. said the metal was likely to remain weighed down as higher crude prices kept inflation pressure in place and reinforced hawkish monetary-policy expectations. Investors were likely to watch the Federal Reserve’s October meeting for clues about the U.S. interest-rate outlook.

Kooijman said: “Although the Fed is widely expected to leave rates steady, attention will likely remain on clues regarding another possible increase in December.” A higher interest-rate environment typically drags down the non-interest-yielding yellow metal.

The 1759 GMT update said gold futures settled lower for a second straight session in New York. Front-month gold slipped 0.4% to $4,122.40 a troy ounce, while silver gained 1.3% to $57.706 a troy ounce. Fawad Razaqzada of Forex.com said the bearish trend may have lost momentum, “but there is no compelling evidence that the metal has bottomed out yet,” in a note.

“Renewed inflation concerns from both hard and soft data, as well as rising oil prices, have raised concerns that central banks will have to tighten their policies further in the coming months,” Razaqzada said. He also said central-bank gold purchases provide some support and cushion downside risks, but may not be enough to prevent at least a temporary break below $4,000.

In a 2236 GMT note, Jefferies said the current strength of U.S. steel spreads was cementing its bullish stance toward BlueScope Steel. Jefferies expected BlueScope to achieve first-half Ebit of A$960 million, at the top end of the company’s A$860 million-to-A$960 million guidance range.

Jefferies analyst Ramoun Lazar said, “We see further upgrade risk for 2H27 given spot of US$890/ton and consensus assuming US$650/ton.” The bank had penciled in US$700 a ton for the second half. Jefferies also said: “Bluescope remains attractive on 8% FY27 free cash flow yield, supporting more than A$1 billion shareholder returns per annum.” It retained a buy call and A$40.00-per-share price target. BlueScope ended Tuesday at A$32.83.

The 1647 GMT update said a deepening slump in U.S. home construction was threatening Canadian lumber producers, according to TD Cowen analyst Sean Steuart. He identified West Fraser, Canfor, Interfor and Western Forest Products as among the most exposed Canadian lumber producers. U.S. housing starts fell 5.2% in September to an annualized 1.221 million units, missing estimates by 6.4% and hitting near six-year lows.

Steuart said residential building accounts for 31% of North American lumber volume. “With rising mortgage rates, we see no obvious near-term catalysts for an affordability reversal,” he said. Single-family starts, which consume more lumber, were down 4.0% year to date compared with last year.

In June, MSI reported that gold was falling as hawkish Federal Reserve signals outweighed relief from the U.S.-Iran interim peace deal. By October, Kooijman said gold was likely to remain weighed down as higher crude prices kept inflation pressure in place and reinforced hawkish monetary-policy expectations; Razaqzada said central-bank purchases provided some support and cushioned downside risks; and investors were likely to watch the Federal Reserve’s October meeting for clues about the U.S. interest-rate outlook.