GLOBAL MARKETS — Gold prices recovered modestly on Monday as falling oil prices eased some inflation concerns, while investors remained cautious ahead of the US Federal Reserve’s upcoming interest-rate decision.
Spot gold gained 0.3% to $4,008.70 per ounce by 0755 GMT. US gold futures for December delivery also advanced 0.3%, reaching $4,021.90.
The rebound followed a difficult week for the precious metal. Gold fell 4% over the week ending Friday, marking its steepest weekly decline since June. During the previous trading session, prices had also dropped to their lowest level since mid-July.
Lower oil prices helped lift gold by easing immediate concerns about inflation. However, investors continued to assess the possibility that interest rates could remain higher for longer than previously expected.
Kyle Rodda, senior financial market analyst at Capital.com, said the improvement in gold prices primarily reflected relief from softer oil prices. He warned that further gains could be limited as investors positioned themselves ahead of the Federal Open Market Committee meeting.
Rodda also noted that gold prices would remain sensitive to interest-rate expectations and geopolitical risks.
The Federal Reserve is scheduled to hold its policy meeting on October 27–28. Traders largely expect the central bank to keep interest rates unchanged, although expectations of a rate increase in December have strengthened. Data from the CME FedWatch Tool showed that markets were pricing in a 79% probability of a December rate hike.
Interest rates remain a key factor for gold because the precious metal does not generate interest income. Higher borrowing costs can make interest-bearing investments more appealing compared with bullion, putting downward pressure on gold prices.
Meanwhile, oil prices declined on Monday after approaching six-month highs during the previous week. Hopes of reduced hostilities between the United States and Iran helped ease market concerns, although continued attacks by Yemen’s Houthi movement on Saudi Arabia kept potential energy supply disruptions in focus.
Diplomatic efforts also drew investors’ attention. Qatari mediators travelled to Tehran on Sunday to help reduce regional tensions in coordination with the United States, according to an official briefed on the situation who spoke to Reuters.
Investors were also looking ahead to US Personal Consumption Expenditures inflation data scheduled for Thursday, October 29. The measure is closely monitored by the Federal Reserve as it works toward its 2% inflation target.
Other precious metals posted mixed results. Spot silver rose 0.2% to $54.00 per ounce, while platinum declined 0.3% to $1,546.18 and palladium fell 0.5% to $1,038.85.
Gold’s modest recovery reflected a market balancing competing pressures, with lower oil prices providing support while expectations of potentially tighter monetary policy continued to restrain further gains.
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