Gold prices slip ahead of Fed decision as oil-driven inflation risks weigh

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Gold prices slip before Fed decision

Highlights

Spot gold drops 0.7% to $4,030.20 per ounce as rising oil prices strengthen inflation risks before the Federal Reserve's policy decision.
Oil rises over 1% after a Saudi refinery attack, increasing expectations the Fed will keep rates higher for longer, pressuring non-yielding metals.
Reuters surveys show analysts lower 2026 gold, platinum, and palladium price forecasts again due to high yields, a strong U.S. dollar, and persistent inflation.

Oil prices and rate outlook pressure bullion

As reported by Reuters, spot gold falls 0.7% to $4,030.20 per ounce by 0602 GMT, while U.S. gold futures for December delivery drop 0.8% to $4,043.0 as higher oil prices revive inflation concerns before the Federal Reserve's policy decision later in the day.

ANZ analyst Soni Kumari says gold is moving on interest rate expectations and inflation risks linked to higher energy prices. She says the Fed is likely to remain cautious, which continues to act as a short-term headwind for gold.

Oil prices climb more than 1% on Wednesday after an attack on a refinery in Saudi Arabia renews concerns over supply risks from the major exporter. Higher energy prices raise expectations that the Fed will keep interest rates higher for longer, increasing the opportunity cost of holding non-yielding bullion.

Broader metals market and inflation signals

Markets await the Fed's decision due at 1800 GMT, along with Personal Consumption Expenditures data on Thursday, a key inflation gauge watched closely by the central bank as it targets a 2% inflation rate. Traders largely expect the Fed to leave rates unchanged today, but the CME FedWatch Tool shows markets are pricing in about an 84% chance of a December rate hike.

Reuters polling of economists indicates high inflation persists in the global economy well into next year. A separate Reuters survey shows analysts cut their 2026 gold price forecast for a second straight quarter because of high Treasury yields, a strong U.S. dollar and expectations of higher-for-longer rates, though they still expect a recovery in 2027.

In other precious metals, spot silver slides 1% to $53.82 per ounce, platinum loses 0.9% to $1,526.74, and palladium steadies at $1,025.63. Analysts and traders also cut their 2026 platinum and palladium price forecasts for a third straight quarter, according to the Reuters survey.

In our earlier article on UBS Global Wealth Management’s extended Fed tightening forecast, we highlighted the bank’s view that persistent inflation could keep policy restrictive for longer, with additional rate hikes still on the table. We also noted that market pricing (including FedWatch probabilities) moved toward a higher-for-longer outlook as investors digested firmer inflation signals and ongoing supply-side risks.

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