Gold Shines Amid Declining Inflation Fears
Gold rises above $4,000 as oil prices fall, amid anticipation of central bank interest rate decisions
Translated by Qiyas from الجريدة — Original source
Gold rose again above the $4,000-per-ounce level today, as a decline in oil prices alleviated some inflation concerns ahead of the US Federal Reserve’s (the central bank) monetary policy meeting this week, which could clarify the future trajectory of interest rates.
Gold climbed 0.5 percent in spot trading to $4,014.49 per ounce, after recording $3,975 on Friday, its lowest level since July 20.
Giovanni Stavola, an analyst at UBS, said, “Some view the $4,000 level as a buying opportunity. Therefore, a slight increase in buying is expected, especially since this level has historically proven technically effective.” He added that gold is also supported by today’s drop in oil prices, but upside potential remains limited due to concerns that the Federal Reserve will continue raising interest rates in December and next year, even if it keeps them unchanged at this week’s meeting.
A FedWatch tool from the CME Group indicates that investors see a 9 percent probability of an interest rate hike on Wednesday and an 80 percent probability of a hike in December.
Brent crude futures fell 2 percent to around $114 per barrel, after rising last week to a six-month high.
The decline in oil prices could ease some pressure on central banks ahead of their meetings this week.
The European Central Bank and the Bank of Japan are expected to keep interest rates unchanged despite inflationary pressures, while leaving open the possibility of a hike in December.
Investors are awaiting US personal consumption expenditure data, scheduled for release on October 29, a key indicator closely monitored by the Federal Reserve in its pursuit of its 2 percent inflation target.
