Gold Prices Rise Amid Softer Oil Costs as Markets Await Fed Decision

Gold prices edged higher on Monday as softer oil prices helped ease inflation concerns, though the recovery remained limited as investors positioned themselves for the Federal Reserve’s upcoming policy decision later in the week.

Spot gold rose 0.4% to $4,009.87 per ounce by 0342 GMT, following a session that touched its lowest level since mid-July. The precious metal had recorded a 4% weekly decline on Friday, marking its steepest weekly drop since June. Meanwhile, US gold futures for December delivery also advanced 0.4% to $4,023.50.

Kyle Rodda, a senior financial market analyst at Capital.com, noted that the recent price movement reflects relief from lower oil prices. However, he cautioned that gains could be capped as markets prepare for the Federal Open Market Committee (FOMC) decision, adding that gold will continue to trade based on interest rate expectations and geopolitical risks.

Oil prices declined on Monday after hitting near six-month highs late last week, though supply concerns persisted due to ongoing attacks on Saudi Arabia. In diplomatic efforts, Qatari mediators visited Tehran on Sunday to help de-escalate regional tensions in coordination with the United States.

Market attention is firmly fixed on the Fed's policy meeting scheduled for October 28. Additionally, the US Personal Consumption Expenditures (PCE) data—a key inflation gauge watched by the central bank as it aims for a 2% inflation target—is due the following day.

According to CME’s FedWatch Tool, traders largely anticipate that the central bank will keep interest rates unchanged during this week's meeting, while expectations for a rate hike in December stand at 75%. Although gold functions traditionally as an inflation hedge, higher interest rates typically reduce the appeal of non-yielding bullion.

In the broader macroeconomic landscape, US business activity slowed modestly in October. Despite the slowdown, robust demand enabled companies to increase prices for goods and services, signaling that inflation may remain persistently high in the coming months.

Among other precious metals, spot silver gained 0.6% to reach $54.19 per ounce. Platinum remained steady at $1,551.31, while palladium increased by 0.6% to $1,050.50.

"The recent movement in gold prices highlights how sensitive commodity markets are to macroeconomic indicators like oil prices and monetary policy shifts. With the Federal Reserve's policy decision and upcoming PCE data in focus, businesses and investors must closely monitor interest rate trajectories. High interest rate expectations and persistent inflation signals can significantly impact capital allocation, making cautious financial planning essential in the current macroeconomic environment." — Dr. Shishir Gupta, Founder & CEO, StartupLanes