Gold extends losses for a fourth session as oil rally lifts inflation worries

what happened

Gold prices slipped for a fourth straight session. According to Reuters, spot gold dropped 0.2% to $4,118.18 an ounce, while December Comex futures lost 0.2% to $4,136.20. Oil rose on supply worries in the Middle East, with traders watching Red Sea shipping risks and threats to Saudi oil infrastructure. Higher energy prices are feeding fears of stickier inflation.

Investors are waiting for the Fed's October 27-28 policy meeting and next week's PCE data. Nearly all economists polled by Reuters expect rates to stay unchanged this month, with a hike in December. CME FedWatch puts the chance of an October hike at as low as 16%, and a December hike at 90%. Spot silver fell 0.9% to $57.44 an ounce, platinum dropped 0.6% to $1,638.61 and palladium slid 1.1% to $1,090.84.

why it matters

Gold pays no interest, so higher rates raise the opportunity cost of holding it and reduce demand. The dollar index has stabilized after recent losses, which also reduces support for bullion. Tastylive's Ilya Spivak said that if expected rate hikes were scaled back, gold could move higher.

market impact

Gold and silver: higher oil and Fed hike expectations pressure precious metals demand

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