Gold market eases as oil-driven inflation fears keep rate outlook in focus

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Gold market eases on oil, rates

Highlights

Spot gold falls 0.6% to $4,063.39 per ounce and U.S. gold futures drop 1% to $4,072.90, though spot remains up 4% for the week.
Oil rebounds over 1% amid persistent Middle East supply concerns, elevating inflation fears and raising expectations that the Federal Reserve keeps interest rates elevated.
Goldman Sachs cuts 2026 gold price forecast to $4,150 from $4,650 due to a more hawkish Fed stance, while silver, platinum, and palladium all post weekly gains.

Oil rebound and Fed expectations shape trading

As reported by Reuters, spot gold falls 0.6% to $4,063.39 per ounce by 0248 GMT, while U.S. gold futures for December delivery drop 1% to $4,072.90. Despite the pullback, spot gold is still up 4% so far this week.

Ilya Spivak, head of global macro at Tastylive, says crude oil has rebounded over the past day, adding to inflationary pressure that weighs on gold. He also says markets are still digesting the U.S. midterm election outcome, leaving bullion largely rangebound in a consolidation phase.

Oil prices rise more than 1% on Friday, although they remain set for a sharp weekly drop on expectations of a de-escalation in the Iran conflict after the U.S. election result. Persistent Middle East supply concerns continue to support crude prices, keeping attention on the inflation outlook.

Payrolls data and broader metals outlook

Higher energy costs can strengthen expectations that the Federal Reserve keeps interest rates elevated for longer, increasing the opportunity cost of holding non-yielding bullion. Investors now await the U.S. non-farm payrolls report due at 1330 GMT, while Fed Vice Chair Michelle Bowman is also scheduled to speak later in the day.

Traders currently see a 68% chance that the Fed will raise rates in December, according to CME's FedWatch tool. On Thursday, two Fed officials make the case for modest and steady rate increases to address inflation that remains above target.

Goldman Sachs on Thursday lowers its end-2026 gold price forecast to $4,150 per ounce from $4,650, citing the implications of the Fed's more hawkish stance in recent months. In other precious metals, spot silver rises 0.3% to $51.91, platinum gains 0.4% to $1,523.63 and palladium slips 0.2% to $1,029.22, with all three also heading for weekly gains.

Our earlier article on UBS’s extended Fed tightening-cycle forecast explained why the bank expects additional rate hikes, including a move in December and another in March 2027, as inflation pressures remain persistent. We noted that risks such as firm services inflation and supply-related shocks could keep policy restrictive for longer—an outlook also reflected in shifting FedWatch pricing.

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