Gold edges higher on softer oil; Fed rate outlook in focus

Gold prices rose slightly on Monday as lower oil prices provided support, according to wire material. Investors were closely watching the Federal Reserve's interest rate outlook for later this year, seeking fresh clues on the central bank's policy direction. Spot gold increased by 0.3% to $4,175.60 per ounce, while US gold futures for December delivery gained 0.4% to $4,196.40.

Analyst Tim Waterer noted that gold was showing a modest rise as investors responded positively to softer oil prices in terms of inflation. In the short term, a more persistent decline in oil prices or a clearer drop in yields would be the most beneficial catalysts for gold, easing inflation and rate concerns. Oil prices declined on Monday following US President Donald Trump's decision to waive sanctions and tariffs on Russia, potentially leading to increased Russian fuel exports.

In the meantime, US import prices surged more than anticipated in September, driven by higher energy product and other goods costs, indicating ongoing inflation pressures due to the Middle East conflict. Market participants are now eagerly awaiting the Federal Open Market Committee's meeting on US interest rates and the Personal Consumption Expenditures (PCE) data due next week.

The Federal Reserve measures inflation using PCE price metrics. According to the CME's FedWatch Tool, the chances of a rate hike this month are at 16%, with a 92% probability of a rise in December. Generally viewed as an inflation hedge, higher interest rates make gold less appealing due to its non-yielding nature. The European Central Bank is expected to raise interest rates by 25 basis points at least once more this year to combat inflation, the International Monetary Fund reported on Friday.

Among other precious metals, spot silver climbed 0.9% to $57.54 per ounce, platinum increased 0.7% to $1,642.29, and palladium rose 1.5% to $1,129.13.