Gold retreats 1.1% as rising oil adds to inflation worries
Markets put the probability of a December US rate increase at 90%, while gold touched its lowest level since Oct 14.
Gold declined on Oct 22 as an oil rally increased worries about inflation and prolonged high interest rates. At 0333 GMT, spot bullion stood at US$4,094.90 per ounce, a 1.1% fall that took it to its lowest level since Oct 14. December-delivery US gold futures were down 0.9% at US$4,111.40.
Attention was turning to the Fed's Oct 27-28 policy meeting. CME's FedWatch Tool showed traders assigning a 16% probability to a rate increase at that meeting, against 90% for December. Policymakers were expected to hold a patient stance for now, despite persistent inflation driven mainly by energy costs.
OANDA senior market analyst Kelvin Wong said continued oil price gains could push inflation expectations higher, increasing the prospect of longer-term rate rises and hurting gold. Expectations that rates would stay elevated across short and long maturities also made holding non-yielding gold more costly, he said.
The oil gains followed additional Houthi attacks in Saudi Arabia, which prompted US orders for some diplomats and their family members to leave its missions there. Investors were also awaiting Personal Consumption Expenditures (PCE) figures, which the Fed monitors while pursuing its 2% inflation target.
Losses extended to other precious metals. Silver's spot price was US$56.44 per ounce after a 2.6% decline. Platinum fell 2.1%, reaching US$1,594.25, while palladium shed 2.6%, trading at US$1,059.05.
