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Gold prices edged lower on Wednesday as rising oil prices and renewed inflation concerns weighed on the market ahead of the US Federal Reserve’s latest interest rate decision.
Spot gold fell 0.1 per cent to $4,055.59 an ounce at 2:54pm Bangladesh time, after gaining nearly 1 per cent in the previous session. US gold futures for December delivery also slipped 0.1 per cent to $4,070.20 an ounce.
Oil prices rose by more than $2 following an attack on an oil refinery in Saudi Arabia, raising fresh concerns over supply. Higher energy costs could fuel inflation and increase the likelihood that the Federal Reserve will maintain a tighter monetary policy for longer, putting pressure on gold.
Hamad Hussain, an economist covering climate and commodities at Capital Economics, said rising oil prices and the risk of a more hawkish Fed stance than markets expect were weighing on gold.
As a non-yielding asset, gold becomes less attractive when interest rates remain high, as investors can earn better returns from interest-bearing assets.
The Federal Reserve was scheduled to announce its interest rate decision at 6pm GMT on Wednesday. Markets widely expected the central bank to keep rates unchanged, although traders were pricing in an 84 per cent chance of a rate hike in December, according to CME’s FedWatch tool.
Investors are also awaiting US Personal Consumption Expenditures (PCE) inflation data, due on Thursday. The index is closely monitored by the Fed, which targets inflation of 2 per cent.
Independent market analyst Nikos Tzabouras said gold could recover if the PCE figures came in favourably and the Fed adopted a less hawkish stance than markets anticipated.
Analysts have lowered their forecasts for gold prices in 2026 for a second consecutive quarter, citing elevated US Treasury yields, a stronger dollar and expectations that interest rates will remain high for longer.
However, a Reuters poll indicated that gold prices could recover in 2027.
The same survey showed analysts had cut their 2026 price forecasts for platinum and palladium for a third consecutive quarter.
Among other precious metals, spot silver fell 0.6 per cent to $54.04 an ounce, while platinum declined 0.1 per cent to $1,538.50. Palladium bucked the trend, rising 0.2 per cent to $1,127.80 an ounce.
Reuters reported that rising oil prices and inflation concerns were weighing on gold ahead of the Fed’s decision.
