Gold falls to July low as inflation concerns weigh before Fed meeting
Bullion slips as much as 1.2% to trade around US$3,975 an ounce
Gold prices plummeted to their lowest level since July as worries about inflation intensified just days before the US Federal Reserve's upcoming policy meeting. The precious metal slipped by as much as 1.2% to reach around US$3,975 per ounce. Brent oil prices surged above US$115 a barrel due to unrest in the Middle East, which threatened global oil supplies.
Simultaneously, US consumer sentiment plunged to a five-month low in October as high prices and increasing interest rates dampened consumer confidence. According to Ryan McKay, a senior commodity strategist at TD Securities, "Gold is being dragged down by concerns over oil prices, rates, and the Fed outlook." The metal is expected to decline by 4% on the week, marking the steepest drop since early June.
Analyst Christopher Wong of OCBC described the current situation as "caught in the risk-off flush," as Middle East tensions drove energy prices up, while a shift away from AI-related stocks attracted investors to US bonds. Higher yields on Treasuries added pressure to gold, which typically suffers when yields rise. Although traders only anticipated a 10% probability of a quarter-point rate increase at the Fed's meeting, the spike in oil prices also fueled speculation of another hike in December.
Despite the decline, gold inflows into exchange-traded funds (ETFs) have been robust, with a 14-week streak of accumulation in gold ETFs. Head of commodity strategy at Saxo Bank A/S, Ole Hansen, noted that "long-term investors keep piling into gold as a hedge against fiscal instability, geopolitical risks, and currency debasement."
Meanwhile, short-term traders remain cautious, focusing on interest rate expectations, currency movements, and technical signals. Spot gold slid 0.6% to US$3,999.05 an ounce by 11:23 am in New York, while silver dipped 0.83% to US$54.12 an ounce. Platinum remained flat, while palladium climbed. The Bloomberg Dollar Spot Index, which tracks the US currency, showed minimal change.
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Also reported by 1 other outlet
- Gold lingers near three-month low ahead of Fed policy meeting economictimes.indiatimes.com
