Al-Sibak: Oil, inflation, and interest rate expectations press on the yellow metal
Dar Al-Sibak Kuwait report analyzes gold price decline amid inflation pressures, rising oil prices, and anticipation of Federal Reserve decisions
Translated by Qiyas from الوسط — Original source
Gold prices ended last week’s trading at $3,995 per ounce, recording a weekly loss of approximately 3.9%, after touching a nearly three-month low of $3,975 amid rising energy prices, growing inflation concerns, and anticipation of U.S. monetary policy decisions.
Kuwait Al-Sabika Company stated in its report issued yesterday, Sunday, that the decline in gold prices coincided with oil prices rising above $100 per barrel, amid escalating geopolitical tensions in the Middle East and concerns related to energy supplies and shipping movements in the Strait of Hormuz.
The company explained that markets are facing a complex equation: geopolitical risks may support demand for gold as a safe-haven asset, while rising energy prices could increase inflationary pressures, potentially prompting central banks to keep interest rates elevated for longer.
It added that consumer inflation expectations have stabilized at 4.7% over the next twelve months and 3.5% over five years, reinforcing caution regarding the trajectory of U.S. monetary policy, particularly with the Federal Reserve’s meeting scheduled for October 27–28 and the release of the Personal Consumption Expenditures (PCE) price index on October 29.
The report noted that markets are also monitoring U.S. dollar movements and Treasury bond yields, given their direct impact on gold prices. Higher yields increase the opportunity cost of holding the precious metal, while lower yields could provide an opportunity for prices to recover some of their losses.
The company pointed out that investors are awaiting decisions from several major central banks, along with initial U.S. and Eurozone gross domestic product (GDP) data, and U.S., European, and Asian inflation figures, as these may offer indicators of global interest rate trends.
On the technical front, the report clarified that gold faces a critical test after falling below the $4,000 per ounce level, noting that $3,975 represents initial support, followed by $3,959 and then $3,941, which is the low recorded since the beginning of the year.
Conversely, the yellow metal needs to reclaim and hold above the $4,000 level to improve short-term momentum, while $4,100 represents initial resistance; a breakout above this level could pave the way toward $4,200, according to the report.
In the Kuwaiti market, the price of 24-karat gold reached approximately 40.3 dinars per gram, equivalent to about $130, while 22-karat gold recorded around 36.9 dinars, equivalent to approximately $119. The price of a kilogram of silver stood at about 601 dinars, equivalent to roughly $1,951, as traders awaited developments in precious metals and energy prices, as well as U.S. monetary policy decisions.
