Gold prices edged higher on Monday as softer oil prices offered support, while investors assessed the chances of a Federal Reserve interest rate hike later this year and looked for fresh signals on the US central bank’s policy trajectory.
Spot gold rose 0.3% to $4,175.60 per ounce by 0259 GMT, while US gold futures for December delivery gained 0.4% to $4,196.40.
“Gold is posting a modest rise to start the week. The metal is responding positively to the softer tone in oil prices from an inflation standpoint,” said Tim Waterer, chief market analyst at KCM Trade.
“In the near term, a more sustained decline in oil prices or a clearer move lower in yields would be the most constructive catalysts (for gold), as both would ease inflation and rate concerns.”
Oil prices slipped on Monday after US President Donald Trump waived sanctions and tariffs on Russia that may lead to more Russian fuel exports.
Meanwhile, US import prices increased more than expected in September, boosted by higher costs for energy products and a range of other goods, further evidence of rising inflation pressures as the Middle East conflict persists.
Market participants now await the Federal Open Market Committee’s meeting on US interest rates and the Personal Consumption Expenditures (PCE) data due next week. The US central bank tracks the PCE price measures for its 2% inflation target.
According to the CME’s FedWatch Tool, traders are pricing in a 16% chance of a rate hike this month and a 92% chance of an increase in December.
While gold is typically considered a hedge against inflation, higher interest rates reduce the appeal of the non-yielding asset.
Elsewhere, the European Central Bank is likely to raise interest rates by 25 basis points at least one more time this year to fight inflationary pressures, the International Monetary Fund said on Friday.
Among other metals, spot silver rose 0.9% to $57.54 per ounce, platinum gained 0.7% to $1,642.29 and palladium climbed 1.5% to $1,129.13.