Gold continues to fall amid rising oil prices and growing inflation concerns

Gold fell for a fourth consecutive session, as rising oil prices fueled inflation concerns, while investors await next week’s Federal Reserve monetary policy meeting for signs regarding the interest rate trajectory.

Spot gold fell 0.2 percent to $4,115.96 per ounce, while U.S. December gold futures dropped 0.2 percent to $4,133.60.

Bas Kooiman, CEO and Head of Assets at DHF Capital, said: “The metal may remain under some pressure as crude oil prices resume their upward trend, keeping inflationary pressures alive and reinforcing expectations of tighter monetary policy.”

Oil prices rose by more than $1, as escalating tensions in the Middle East heightened fears of supply disruptions.

Ilya Spivak, Head of Global Macro at Tysti Live, stated: “At this stage, if some of the interest rate hikes already priced in by markets for next year are removed from expectations, or at least if the probability of them occurring declines, gold is likely to rise.”

According to most economists surveyed by Reuters, the Federal Reserve will not raise interest rates this month but will do so in December, as policymakers remain patient despite persistent inflation.

According to the CME’s FedWatch tool, the probability of a rate hike at the U.S. central bank’s monetary policy meeting scheduled for October 27-28 has fallen to just 15 percent, while traders still see a 90 percent chance of a rate increase in December.

Higher interest rates typically weigh negatively on gold, as they increase the opportunity cost of holding the non-yielding metal. The dollar index stabilized after recent losses, adding further pressure on demand for the precious metal.

Markets are also awaiting next week’s release of U.S. Personal Consumption Expenditures (PCE) data, the Federal Reserve’s preferred gauge for tracking its 2 percent inflation target.

A joint report by the World Gold Council and Boston Consulting Group revealed that the digital gold market, currently valued between $45 billion and $55 billion, could unlock up to $700 billion in latent demand if barriers hindering its adoption among individual investors are removed.

The report noted that approximately nine out of ten surveyed investors expressed willingness to consider investing in digital gold under suitable conditions, reflecting strong appetite that has yet to translate into actual demand.