Gold rises as oil declines

Gold prices edged higher on Monday, as a decline in oil prices eased some inflation concerns ahead of next week’s Federal Reserve meeting, which is expected to leave interest rates unchanged.

Spot gold rose 0.2% to $4,171.60 per ounce, while U.S. December gold futures gained 0.26% to $4,196.90. Giovanni Staunovo, an analyst at UBS, said that lower oil prices relieve pressure on the Federal Reserve, which supports gold.

Notably, gold has held firm despite a stronger dollar, as both assets benefit from demand for safe-haven holdings, according to Reuters. Oil prices fell on Monday from a five-month high after U.S. President Donald Trump exempted Russia from sanctions and tariffs, a move that could boost Russian fuel exports.

The drop in oil prices helped alleviate some inflation worries following strong readings of the U.S. consumer price index and producer price index last week, partly driven by higher fuel costs.

Investors are now awaiting next week’s Federal Reserve meeting and U.S. personal consumption expenditures (PCE) data, the central bank’s preferred gauge of inflation.

Staunovo added: “We expect the Fed to keep interest rates unchanged this time, so the meeting itself may not be a major driver for gold. The key factor will be what upcoming data on inflation and the labor market reveal about the interest rate trajectory.”