Gold slips on oil-fuelled inflation fears ahead of Fed meeting

Gold prices experienced a decline on Wednesday, following a modest rise of approximately 1% the previous day. This fall was attributed to higher oil prices, which have increased inflation concerns as investors await the Federal Reserve's policy decision. Spot gold was trading at $4,045.29 per ounce, marking a 0.3% decrease, while US gold futures for December fell 0.4% to $4,059.00.

Analyst Soni Kumari from ANZ explained that gold's movement is influenced by rate expectations and inflation risks due to the surge in energy prices. Consequently, the Federal Reserve may remain cautious, presenting a short-term challenge for gold. The recent attack on a refinery in Saudi Arabia, a leading crude exporter, has heightened worries about supply risks in the Middle East, causing oil prices to rise.

Investors are anticipating the Fed's policy decision at 1800 GMT, alongside the release of Personal Consumption Expenditures data on Thursday, a crucial indicator closely monitored by the central bank in its pursuit of a 2% inflation target. Although traders expect the Fed to keep rates unchanged today, there is an estimated 84% probability of a December rate hike, as indicated by the CME's FedWatch Tool.

Economists have expressed concern that high inflation will persist globally throughout 2025. Furthermore, a recent survey of analysts suggests that gold price forecasts for 2026 have been reduced for the second consecutive quarter, primarily due to elevated Treasury yields, a strong US dollar, and the expectation that rates will remain higher for an extended period.

However, there is still optimism for a recovery in 2027. In addition to gold, platinum and palladium prices have also been lowered for the third consecutive quarter, as reported in a Reuters survey.