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Gold prices rose again in global markets as falling oil prices and easing tensions in the Middle East helped ease inflation concerns, Reuters reported.
Investors are also awaiting the US Federal Reserve’s interest rate decision. Gold rebounded on Monday, October 26, after dropping to its lowest level in more than three months during the previous session.
According to Reuters, spot gold prices rose 0.6 percent to $4,020.60 per ounce around midnight Bangladesh time on Monday. Prices had fallen to $3,975 per ounce on Friday, their lowest level since July 20.
Bob Haberkorn, senior market strategist at StoneX, said falling crude oil prices were supporting the gold market. Investors were also taking advantage of lower prices to buy gold. He expected prices to remain around $4,000 per ounce until the Federal Reserve announces its decision.
Oil prices fell on Monday after climbing close to a six-month high last week. The possibility of easing tensions between the United States and Iran contributed to the decline. Lower oil prices have helped ease inflation concerns, although renewed supply disruptions could reverse the trend.
The Federal Reserve is scheduled to announce its interest rate decision on Wednesday. After raising rates in September, the central bank is widely expected to leave them unchanged this time. However, data from CME’s FedWatch Tool indicated an 80 percent probability of another rate hike in December.
Higher interest rates generally increase the opportunity cost of holding non-yielding assets such as gold, putting pressure on prices. Although Federal Reserve officials have signalled that rates may remain unchanged this week, investors believe the pause may not last long because of persistent inflation concerns.
Meanwhile, the US Personal Consumption Expenditures (PCE) price index is scheduled for release on Thursday. Investors are looking to the index, the Federal Reserve’s preferred measure of inflation, for fresh clues about the future direction of interest rates.
Market participants are also closely monitoring the US midterm elections scheduled for November 3. Analysts are assessing how the results could affect fiscal policy, tariffs, geopolitical spending and broader policy uncertainty.
According to analysts at OCBC, these factors could influence US Treasury yields, the value of the dollar and gold prices.
