Gold dips for fourth session as oil rally fans inflation concerns

Gold prices dipped for the fourth consecutive day on Wednesday, as rising oil prices fueled concerns about inflation and investors eagerly awaited the upcoming Federal Reserve policy meeting. Spot gold fell 0.1% to $4,119.37 per ounce by 0516 GMT, while US gold futures for December delivery declined 0.1% to $4,137.00. Bas Kooijman, CEO of DHF Capital S.A., noted that the metal may continue to face pressure due to higher crude prices, which could maintain inflationary pressures and bolster expectations of a hawkish monetary policy.

Oil prices rose on Middle East supply worries, with traders concerned about Red Sea shipping risks and threats to oil infrastructure in Saudi Arabia. If some of the anticipated interest rate hikes for next year are scaled back or their likelihood is reduced, gold could potentially benefit, according to Ilya Spivak, head of global macro at Tastylive.

The Federal Reserve is expected to skip raising interest rates this month and instead raise them in December, with economists polled by Reuters giving a 15% chance of a hike during the October 27-28 meeting, while an 88% chance remains for December, according to CME’s FedWatch Tool. Higher interest rates generally hinder gold prices, as they raise the opportunity cost of holding the metal, which does not yield interest.

The US dollar index stabilized after recent declines, adding to the downward pressure on bullion demand. Other precious metals also experienced declines, with spot silver slipping 1.1% to $57.35 per ounce, platinum falling 0.6% to $1,639.47, and palladium decreasing 1% to $1,091.78.