Gold eases as elevated oil prices keep inflation risks in focus
GLD•Spot gold fell 0.4% to $4,123.94 an ounce as higher oil prices heightened inflation concerns ahead of next week's Federal Reserve meeting. Traders saw a 91% chance of a rate hike in December, according to CME's FedWatch Tool.
1. Oil pressures gold
Spot gold fell 0.4% to $4,123.94 per ounce by 0800 GMT, while U.S. gold futures for December delivery dropped 0.4% to $4,142.70. Oil prices advanced, with Brent hovering around a five-month high after Yemen's Iran-aligned Houthis said they had attacked Saudi energy, airport and military targets.
2. Rates in focus
Higher energy prices can raise expectations that the Federal Reserve will keep interest rates higher for longer, which tends to reduce gold's appeal by increasing the opportunity cost of holding it. Traders largely expect the Fed to leave rates unchanged at its October 27-28 meeting, while CME's FedWatch Tool showed a 91% chance of a rate hike in December.
