Gold steadied after touching its lowest level in nearly a week on Wednesday, as a rally in oil prices reignited inflation concerns while investors braced for next week’s Federal Reserve meeting for clues on the interest rate outlook.
Spot gold fell for a fourth straight session, down 0.1 percent at $4,121.27 per ounce by 0910 GMT, hitting its lowest level since October 15 in earlier trade. US gold futures for December delivery fell 0.1 percent to $4,139.50 per ounce.
“Gold has adhered to the downtrend that began 2 months ago on persistent expectations that more Fed rate hikes are in store,” said Han Tan, chief market analyst at Bybit. Gold is traditionally seen as an inflation hedge, but loses appeal as a non-yielding asset in a high-interest-rate environment.
The Fed will skip raising interest rates this month and deliver a hike in December, according to nearly all economists polled by Reuters, as policymakers signal patience even as stubborn inflation argues for a tougher response.
“Despite the expected pause at next week’s FOMC meeting, Fed funds futures are fully pricing in one more 25-bps hike before the year comes to a close, with two more hikes expected by mid-2027,” Tan added.
Markets are also waiting for US Personal Consumption Expenditures data next week, the Fed’s preferred gauge to monitor its 2 percent inflation target. Hotter-than-expected consumer and producer inflation data last week showed that US price pressures remained elevated on soaring energy prices.
Oil prices gained more than $1, with Brent futures holding above $110 a barrel, as escalating Middle East tensions fuelled fears of supply disruptions.