Gold prices edged higher on Monday, supported by a decline in oil prices that eased concerns over inflationary pressures, as investors awaited the U.S. Federal Reserve’s interest rate decision later this week.
Spot gold rose 0.4% to $4,009.87 per ounce as of 03:42 GMT, after hitting its lowest level since mid-July in the previous session. The precious metal recorded a weekly loss of 4% on Friday, its steepest decline since June.
U.S. gold futures for December delivery also gained 0.4% to $4,023.50 per ounce.
Kyle Rodda, senior financial market analyst at Capital.com, said the rebound largely reflected relief following the decline in oil prices. However, gains could remain limited as markets position themselves ahead of the Federal Open Market Committee’s (FOMC) decision in the coming days.
He added that gold trading would remain closely tied to interest rate expectations and geopolitical risks.
Oil prices fell on Monday after approaching their highest levels in nearly six months late last week, although continued attacks on Saudi Arabia kept concerns over supply disruptions elevated.
Meanwhile, Qatari mediators traveled to Tehran on Sunday to help de-escalate regional tensions in coordination with the United States, Reuters reported, citing an official familiar with the situation.
Investors are now focused on the Federal Reserve’s meeting scheduled for October 27–28, with its monetary policy decision expected on Wednesday.
Markets are also awaiting the release of U.S. Personal Consumption Expenditures (PCE) data on Thursday.
The PCE index is a key inflation gauge closely monitored by the central bank as it works toward its 2% inflation target.
Market expectations suggest that the Federal Reserve will leave interest rates unchanged this week, while traders are pricing in a 75% probability of a rate hike in December, according to CME Group’s FedWatch Tool.
Although gold is traditionally considered a hedge against inflation, higher interest rates tend to reduce its appeal because the metal does not generate interest or yield.
In other economic developments, U.S. business activity slowed slightly in October. However, strong demand allowed companies to raise prices for goods and services, suggesting that inflation could accelerate again and remain elevated in the coming months.
Among other precious metals, spot silver rose 0.6% to $54.19 per ounce, while platinum remained steady at $1,551.31. Palladium gained 0.6% to $1,050.50 per ounce.
