Gold Prices Rise Over 1% as Softer Oil Prices Ease Inflation Worries

Gold prices rose more than 1% on Monday as softer oil prices eased inflation concerns, while investors awaited key US inflation data and fresh signals from the Federal Reserve on its policy outlook.

Spot gold climbed 1.4% to $4,123.46 per ounce by 0428 GMT, while US gold futures for December delivery also rose 1.4% to $4,132.70. Bullion had previously gained about 5% the preceding week.

Oil prices fell after US President Donald Trump stated that he was highly unlikely to order further attacks on Iran as talks to end the conflict continued, easing concerns about potential supply disruptions in the region.

Lower oil prices can ease inflationary pressures and reduce expectations that interest rates will stay higher for longer, thereby lowering the opportunity cost of holding non-yielding bullion.

“Trump's more conciliatory tone toward Iran is helping keep a lid on oil prices, which in turn eases some of the inflation pressure that had been weighing on the metal along with a modest pullback in the dollar,” said Tim Waterer, chief market analyst at KCM Trade.

The US dollar also softened, making greenback-priced bullion more affordable for buyers overseas.

Meanwhile, US job growth accelerated in October and the unemployment rate fell to 4.1%, reinforcing expectations that the labour market remains resilient and keeping the Federal Reserve on track for a potential December interest-rate increase.

Traders currently see an 81% chance that the Fed will raise rates in December, up from 71% prior to the payrolls data, according to CME's FedWatch tool.

Market participants are now awaiting the US Consumer Price Index data due on Tuesday and the Producer Price Index on Friday to further gauge the central bank's monetary policy stance.

“Any hot readings would likely firm the dollar and lift the odds of a December rate hike, which would quickly put gold back on the defensive,” Waterer added.

Among other precious metals, spot silver climbed 2.5% to $53.15 per ounce, platinum gained 1.3% to $1,553.23, and palladium rose 2.1% to $1,045.11.

"Global commodity markets continue to react sensitively to geopolitical updates and macroeconomic indicators. The recent dip in oil prices provides temporary relief for inflation expectations, directly benefiting non-yielding assets like gold. However, business leaders and investors must closely monitor upcoming US consumer and producer price data, as any shift in central bank interest rate policies will quickly influence currency strengths and asset valuations across international markets." — Dr. Shishir Gupta, Founder & CEO, StartupLanes