Gold prices edge higher as softer oil tempers inflation concerns

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Gold prices edge higher

Highlights

Spot gold rises 0.3% to $4,175.60 per ounce and U.S. gold futures for December delivery gain 0.4% to $4,196.40 as softer oil tempers inflation concerns.
Market awaits the Federal Open Market Committee's interest rate decision and Personal Consumption Expenditures data, with CME FedWatch Tool showing a 16% chance of a rate hike this month and 92% in December.
Oil prices fall after U.S. President Donald Trump waives Russia tariffs, while U.S. import prices increase more than expected in September, adding to inflation pressures.

Price moves and policy signals

As reported by Reuters, spot gold rises 0.3% to $4,175.60 per ounce by 0259 GMT, while U.S. gold futures for December delivery gain 0.4% to $4,196.40.

Tim Waterer, chief market analyst at KCM Trade, says gold is posting a modest rise to start the week and is responding positively to the softer tone in oil prices from an inflation standpoint. He adds that, in the near term, a more sustained decline in oil prices or a clearer move lower in yields would be the most constructive catalysts for gold because both would ease inflation and rate concerns.

Market participants are awaiting the Federal Open Market Committee's meeting on U.S. interest rates and the Personal Consumption Expenditures data due next week. The U.S. central bank uses the PCE price measures to track its 2% inflation target, while the CME FedWatch Tool shows traders pricing in a 16% chance of a rate hike this month and a 92% chance of an increase in December.

Broader inflation backdrop and metals market impact

Oil prices slip on Monday after U.S. President Donald Trump waives sanctions and tariffs on Russia, a move that may lead to more Russian fuel exports. At the same time, U.S. import prices increase more than expected in September, lifted by higher costs for energy products and a range of other goods, adding to evidence of rising inflation pressures as the Middle East conflict persists.

Gold is typically viewed as a hedge against inflation, but higher interest rates reduce the appeal of the non-yielding asset. Elsewhere in precious metals, spot silver rises 0.9% to $57.54 per ounce, platinum gains 0.7% to $1,642.29 and palladium climbs 1.5% to $1,129.13.

The wider policy backdrop remains firm in other major economies as well. The International Monetary Fund says on Friday that the European Central Bank is likely to raise interest rates by 25 basis points at least one more time this year to counter inflationary pressures.

Our earlier article on UBS Global Wealth Management’s outlook highlighted how persistent inflation pressures could keep the Federal Reserve on a higher-for-longer path, with additional rate hikes still on the table. We noted that UBS projected further tightening into 2027 and that FedWatch pricing had shifted toward a higher probability of a December hike, reinforcing the idea that elevated yields and restrictive policy could remain a key driver for markets.

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