Spot gold slipped for a third session as high oil prices stoked inflation concerns. Traders are watching the Federal Reserve's meeting next week and the PCE price index for signs of further tightening.
Spot gold fell 0.1% to $4,137.84 per ounce on Tuesday, extending losses for a third session. Elevated oil prices fuelled inflation concerns and clouded the outlook for U.S. monetary policy ahead of the Fed's meeting next week.
U.S. gold futures for December also ticked down 0.1% to $4,165.34. The metal had fallen 0.6% in the previous session after a weekly loss.
Oil prices keep inflation worries alive
Brent crude remained above $109 a barrel on Tuesday after touching a five-month high of $110.70 in the previous session. Concerns over potential disruptions to Middle Eastern energy supplies outweighed some relief from a possible easing of U.S. restrictions on Russian energy exports.
Meanwhile, Yemen's Iran-aligned Houthi group said on Monday it had carried out attacks on Saudi energy, airport and military targets, including an Aramco facility. The attacks added to concerns about risks to regional oil supplies.
Investors are assessing the risk that higher energy prices could keep inflation elevated and prompt the Fed to maintain restrictive monetary policy for longer. Gold, which pays no interest, tends to lose appeal when interest rates and bond yields rise, increasing the opportunity cost of holding bullion.
Fed meeting and PCE data loom
The Fed is widely expected to leave interest rates unchanged at its October 27-28 meeting. Traders are pricing in an 83% probability of a hold next week, according to the CME FedWatch Tool.
However, the likelihood of a rate hike in December stands at 94%, according to the same tool. The central bank raised its benchmark rate by 25 basis points in September to a range of 3.75%-4.00%.
The focus is also on next week's U.S. Personal Consumption Expenditures (PCE) price index, the Fed's preferred inflation gauge, for clues on whether persistent price pressures could warrant further tightening. Consumer prices rose 3.7% year-on-year in September, while gasoline prices surged 9.1%.
Among other precious metals, spot silver edged 0.1% higher to $57.1325 an ounce, while platinum rose 0.5% to $1,650.65/oz.
Source: Investing.com
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