Gold rises amid oil decline, with focus on interest rate expectations

Gold prices rose on Monday, supported by a decline in oil prices, as investors assessed the likelihood of the Federal Reserve raising interest rates later this year and sought new indicators of the central bank’s policy trajectory.

Spot gold rose 0.3 percent to $4,175.60 per ounce by 02:59 GMT, while U.S. December gold futures climbed 0.4 percent to $4,196.40.

Tim Waterer, markets analyst at KCM Trade, said, “Gold posted a slight gain at the start of the week. The metal responded positively to the weak trend in oil prices from an inflation perspective.”

Oil prices fell today after U.S. President Donald Trump exempted Russia from sanctions and tariffs, a move that could boost Russian fuel exports.

Meanwhile, U.S. import prices rose more than expected in September, driven by higher costs for energy products and a range of other goods, providing fresh evidence of mounting inflationary pressures amid the ongoing conflict in the Middle East.

Market participants are now awaiting the Federal Open Market Committee’s meeting on U.S. interest rates and the personal consumption expenditures data, scheduled for release next week.

CME Group’s “Fed Watch” tool indicates that traders are pricing in a 16 percent probability of an interest rate hike this month and a 92 percent probability of a rate increase in December.

Although gold serves as a hedge against inflation, higher interest rates reduce the appeal of the non-yielding metal.

On Friday, the International Monetary Fund said it is likely that the European Central Bank will raise interest rates by 25 basis points at least one more time this year to combat inflationary pressures.

Among other precious metals, spot silver rose 0.9 percent to $57.54 per ounce, platinum gained 0.7 percent to $1,642.29, and palladium increased 1.5 percent to $1,129.13.