Gold Prices Stay Near Three-Month Low Before Fed Policy Meeting As Rate Outlook, Oil Prices And Middle East Tensions Weigh On Bullion

Gold prices remained close to a three-month low on Monday as investors waited for the US Federal Reserve’s policy meeting this week. The market is looking for clues on the central bank’s interest rate outlook, with concerns over inflation continuing to weigh on the metal.

Spot gold slipped 0.2% to $3,987.45 per ounce by 0037 GMT, after touching its lowest level since mid-July in the previous session. The metal lost 4% over the week ended Friday, marking its steepest weekly decline since June. US gold futures for December delivery were also down 0.2% at $4,000.80 per ounce.

Other precious metals saw mixed moves. Spot silver rose 0.2% to $54 per ounce, while platinum slipped 0.1% to $1,549.42 per ounce. Palladium gained 0.4% to $1,047.90 per ounce.

Oil Prices And Middle East Tensions Keep Inflation Concerns Alive

Oil prices eased on Monday after climbing to near six-month highs late last week. However, attacks on Saudi Arabia have kept concerns over supply disruptions in focus.

Higher energy prices can add to inflationary pressure and make it harder for the Fed to cut interest rates. That could keep borrowing costs elevated for longer, making gold less attractive because the metal does not pay interest.

Saudi Arabia said that operations had resumed at two terminals of its main airport on Sunday, even as Yemen’s Iran-aligned Houthis threatened further strikes. The group described the airport as a “military target”.

Efforts to ease regional tensions were also underway. Qatari mediators travelled to Tehran on Sunday as part of discussions coordinated with the United States, Reuters reported, citing an official briefed on the matter.

Fed Meeting And Inflation Data In Focus

Recent US economic readings have added to uncertainty over the path of interest rates. Consumer sentiment slipped close to a record low in October, with rising prices linked to the Middle East conflict weighing on households’ views of the economy, according to a survey released on Friday.

At the same time, US business activity slowed modestly in October, but demand remained strong enough for companies to raise prices for goods and services. The trend has raised concerns that inflation could stay high in the coming months.

Investors are now watching the Fed’s policy meeting this week, along with the Personal Consumption Expenditures (PCE) price index, a key inflation measure monitored by the central bank as it targets 2% inflation.

Market pricing showed traders assigning about a 9% chance of an interest rate hike this week, while the probability of a hike in December remained around 80%.

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