Gold Remains Under Pressure

Gold prices hovered around $4,130 an ounce on Wednesday after falling to their lowest level since October 15, as elevated oil prices fueled inflation concerns ahead of next week’s Federal Reserve policy meeting. The metal has remained under pressure in recent weeks amid expectations that further rate hikes could be needed to contain inflation. Although gold is traditionally viewed as an inflation hedge, its lack of yield makes it less attractive when interest rates rise. Markets expect the Fed to hold rates steady on October 28, while pricing in a potential hike in December as policymakers assess persistent price pressures. Recent hotter-than-expected consumer and producer price data have reinforced concerns that surging energy costs are keeping inflation elevated. Meanwhile, UK inflation rose to an 11-month high of 3.5% in September, strengthening expectations that the Bank of England could raise interest rates as soon as November.

Gold prices fell toward $4,100 per ounce on Wednesday, marking a fourth straight session of declines as elevated oil prices intensified inflation concerns and strengthened expectations for interest rate hikes. Oil resumed its upward trend after a diplomat dismissed reports that a deal to end the US-Iran conflict was imminent, although negotiations remain underway. Rising tensions in the Middle East and Eastern Europe, along with increased attacks on tankers in the Strait of Hormuz, further heightened concerns over supply disruptions. Meanwhile, the US Federal Reserve is widely expected to leave interest rates unchanged next week, though markets anticipate a possible rate hike in December. The Bank of Japan and the European Central Bank are also expected to maintain their policy rates next week. Although gold is traditionally considered a hedge against inflation, higher interest rates tend to weaken its appeal compared with interest-bearing assets.

Gold prices edged lower to $4,120 an ounce on Tuesday as rising oil prices stoked inflation concerns, prompting investors to reassess the US interest rate outlook ahead of next week’s Federal Reserve meeting. Brent crude climbed to a five-month high amid renewed Houthi attacks and reports of vessel strikes in the Gulf, heightening concerns over regional supply disruptions and reinforcing expectations of tighter monetary policy. Although the Fed is widely expected to leave rates unchanged next week, investors will closely scrutinize its forward guidance for clues on a potential December hike. Markets now price in a more than 90% chance of a rate increase, according to the CME FedWatch Tool. While gold is traditionally viewed as an inflation hedge, higher interest rates reduce its appeal relative to yield-bearing assets.