Gold prices experienced a slight increase during early Asian trading on Monday, yet remained close to a one-year low. Ongoing concerns regarding inflation have bolstered expectations that the Federal Reserve may implement interest rate hikes later this year, thereby diminishing the attractiveness of bullion. Spot gold increased by 0.5% to $3,894.89 per ounce as of 0042, yet remained close to its lowest level since October 2025, which was reached in the previous session. US gold futures for December delivery increased by 0.1%, reaching a price of $3,903.90.
Bullion reached its lowest point since October 2025 on Friday, dropping below the critical $4,000 per ounce threshold. This decline was driven by a significant downturn in technology stocks, which triggered forced selling of safe-haven assets like gold and resulted in margin calls, according to analysts in a note on Friday. A trio of Fed officials articulated their rationale on Friday for further interest rate increases to address elevated inflation levels. This marked the initial commentary from central bankers following last week’s monetary policy meeting, during which short-term borrowing costs were maintained at their current levels.
Data indicated that US inflation accelerated in September, driven by higher consumer prices for petrol and other goods. This development aligns with economists’ forecasts for a potential interest rate increase from the Federal Reserve in December. Market participants are assigning approximately a 75% probability to the likelihood of an interest rate increase in December, as indicated by the CME’s FedWatch Tool. Elevated interest rates heighten the opportunity cost associated with holding non-yielding bullion, thereby diminishing its attractiveness to investors. Iranian negotiators were in Doha on Sunday for a third consecutive day of discussions with Qatari mediators, seeking to advance a resolution to the ongoing US-Israeli conflict concerning Iran, according to an official familiar with the negotiations.
Inflation in the Euro zone is anticipated to be significantly elevated this year and the next compared to previous forecasts, with a potential return to the European Central Bank’s 2% target not occurring until 2028, according to the bank’s Survey of Professional Forecasters released on Friday. In other regions, the demand for physical gold in significant Asian markets was lacklustre last week, as Indian purchasers postponed acquisitions, expecting a further drop in prices, while consumption in the leading market, China, remained tepid. Spot silver gained 1.2% to $49.6935 per ounce, platinum rose 0.8% to $1,446.05, and palladium climbed 1.1% to $986.76.
