Gold was headed for a second straight weekly decline, down 3.2% so far this week, as elevated energy prices fuelled inflation concerns and strengthened expectations of higher-for-longer interest rates. Spot gold briefly fell below $4,000 an ounce, while traders saw an 83% probability of a December Fed rate hike.
Spot gold recovered 0.2% to $4,030.67 an ounce by 9:18 a.m. EDT after falling to $3,986.50, its lowest level since mid-July and the first time below $4,000 since then. Bullion was down 3.2% for the week, while December U.S. gold futures fell 0.3% to $4,046.40 per ounce.
Brent crude touched a more than five-month high after Houthi attacks in Saudi Arabia raised concerns about further energy supply disruptions. Analyst Jim Wyckoff said heightened inflation concerns could slow central banks’ easing and that technology-stock margin calls were prompting some investors to sell gold and silver. Traders saw a 92% chance the Fed would leave rates unchanged at its October 27-28 meeting and an 83% probability of a December hike. The U.S. Personal Consumption Expenditures report, the Fed’s preferred inflation gauge, is due October 29.
Gold buying picked up in India during the Dussehra festival as lower prices boosted purchases and lifted premiums. Physical demand in China was steady, while cautious consumers continued to curb jewellery spending. Silver, palladium and platinum also fell and were headed for weekly declines.
