Gold climbs as softer oil prices ease inflation concerns

Traders Union
All News
Commodities
Gold climbs as oil eases

Highlights

Spot gold rises 1.6% to $4,129.69 per ounce and U.S. gold futures for December climb 1.6% to $4,139.00, supported by softer oil prices.
Oil prices fall after President Trump signals reduced risk of further action against Iran, easing inflation fears and weakening dollar, benefiting gold prices.
Probability of a Federal Reserve December rate hike climbs to 79% after strong U.S. jobs data, while traders await key inflation readings for policy direction.

Price moves and policy expectations

As reported by Reuters, spot gold rises 1.6% to $4,129.69 an ounce by 0220 GMT, while U.S. gold futures for December delivery gain 1.6% to $4,139.00. Bullion is also coming off a strong prior week, with prices up about 5%.

Oil prices fall after U.S. President Donald Trump says he is highly unlikely to order further attacks on Iran as talks to end the conflict continue, easing fears of supply disruptions. Lower oil prices can reduce inflation pressure and weaken expectations that interest rates stay higher for longer, cutting the opportunity cost of holding gold.

Tim Waterer, chief market analyst at KCM Trade, says Trump's more conciliatory tone toward Iran is helping cap oil prices, which in turn eases some of the inflation pressure that had weighed on gold, alongside a modest pullback in the dollar. The U.S. dollar also softens, making dollar-priced bullion more affordable for overseas buyers.

Broader metals market and data focus

At the same time, U.S. job growth accelerates in October and the unemployment rate falls to 4.1%, reinforcing expectations that the labour market remains resilient and keeping the Federal Reserve on track for a December interest-rate increase.

Traders now see a 79% chance of a December rate hike, up from 71% before the payrolls data, according to CME's FedWatch tool. Market participants next await the U.S. Consumer Price Index due on Tuesday and the Producer Price Index on Friday for further guidance on the Fed's policy path.

Waterer says any hotter-than-expected inflation readings would likely strengthen the dollar and raise the odds of a December increase, which could quickly put gold back under pressure. Elsewhere in precious metals, spot silver climbs 2.8% to $53.31 an ounce, platinum gains 1.6% to $1,556.14 and palladium rises 2.1% to $1,044.28.

In our earlier article on UBS Global Wealth Management’s outlook for a longer Fed tightening cycle, we explained why the bank expects additional rate hikes, including a move in December and another in March 2027, as inflation pressures persist. The piece also highlighted how markets repriced the path for rates after firm CPI data, reinforcing a higher-for-longer policy backdrop that can influence assets sensitive to yields and the dollar.

This material may contain third-party opinions, none of the data and information on this webpage constitutes investment advice according to our Disclaimer. While we adhere to strict Editorial Integrity, this post may contain references to products from our partners.