Gold prices remained close to a three-month low on Monday, as investors anticipated this week’s Federal Reserve policy meeting for insights into the policymakers’ perspective on US interest rates. Spot gold experienced a decline of 0.2%, trading at $3,987.45 per ounce by 0037, following a drop to its lowest level since mid-July in the preceding session. Bullion experienced a 4% decline over the week as of Friday, marking its most significant weekly drop since June. US gold futures for December delivery decreased by 0.2%, settling at $4,000.80. Oil prices declined on Monday following a rise to near six-month highs late last week, while persistent attacks on Saudi Arabia continued to highlight supply concerns.
Elevated energy prices strengthen expectations for prolonged higher interest rates from the Fed, thereby raising the opportunity cost associated with holding non-yielding bullion. On the geopolitical front, Saudi Arabia announced that its primary airport recommenced operations at two terminals on Sunday, despite Yemen’s Iran-aligned Houthis pledging to continue attacks on the facility, which they designated as a “military target”. On Sunday, Qatari mediators were present in Tehran, engaging in efforts to mitigate regional tensions in collaboration with the United States, according to an official.
US consumer sentiment declined to nearly a record low in October, as escalating prices linked to the Middle East conflict negatively impacted households’ perceptions of the economy. This shift occurs just ahead of midterm congressional elections that are focused on affordability concerns, according to a survey released on Friday. US business activity experienced a slight deceleration in October; however, strong demand enabled firms to elevate prices for goods and services. This development suggests that inflation may rise further and persist at elevated levels in the upcoming months.
Markets are poised for the upcoming Federal Reserve policy meeting this week, alongside the release of the Personal Consumption Expenditures data, which serves as a critical indicator monitored by the central bank in its pursuit of a 2% inflation target. Market participants are currently assigning approximately a 9% probability to the prospect of an interest rate increase this week, whereas the likelihood of a hike in December is maintained at 80%. Among other metals, spot silver experienced an increase of 0.2%, reaching $54 per ounce, while platinum saw a slight decline of 0.1%, settling at $1,549.42. In contrast, palladium recorded a gain of 0.4%, rising to $1,047.90.
