Gold Drops on Rising Middle East Risks

Gold prices fell to around $4,050 an ounce on Thursday, hitting their lowest level since early August, as rising oil prices heightened inflation concerns ahead of next week’s Federal Reserve policy decision. Brent crude climbed to its highest level since May after renewed Houthi attacks in Saudi Arabia raised fears of a broader regional escalation and further supply disruptions. Recent US consumer and producer inflation data came in hotter than expected, while falling weekly jobless claims pointed to continued labor market resilience, strengthening the case for tighter monetary policy. Although the Fed is widely expected to hold rates at its October 27–28 meeting, Goldman Sachs forecasts another 25-basis-point hike in December. Traders are also pricing in an over 85% probability of a December increase, according to CME’s FedWatch Tool. Investors now await next week’s PCE price index, the Fed’s preferred measure of inflation, for further clues on the policy outlook.

Gold decreased to 4066.00 USD/t.oz, the lowest since August 2026. Over the past 4 weeks, Gold lost 5.07%, and in the last 12 months, it decreased 1.36%.

Gold prices dropped below $4,100 an ounce on Thursday, erasing gains from the previous session as renewed tensions in the Middle East pushed oil prices higher and fueled inflation concerns. Crude oil advanced following a drone strike on Saudi Aramco’s Shaybah field that killed two people, while the US ordered some personnel and family members to leave American embassies in Saudi Arabia. Reports also suggested that the US and Israel have drawn up plans for renewed strikes on Iran after the midterm elections. Meanwhile, the US Federal Reserve is widely expected to keep interest rates unchanged next week, after Chair Kevin Warsh’s remarks last Friday did little to alter expectations for a pause. However, markets continued to anticipate a potential Fed rate hike in December amid persistent energy-driven inflation. Although gold is traditionally considered a hedge against inflation, its lack of yield makes it less appealing when interest rates rise.