Gold falls to two-week low as oil-driven inflation fears grow

what happened

Spot gold lost 1.4% to $4,081.89 an ounce by 0902 GMT, according to Reuters, its lowest point in more than two weeks. The metal came under pressure as crude prices jumped more than $2 a barrel after fresh Houthi attacks in Saudi Arabia raised fears of a wider conflict and supply disruption.

US consumer and producer price data released last week surprised on the upside, mainly because energy costs keep rising. That has strengthened the case for tighter monetary policy, though Fed policymakers are still forecast to keep rates unchanged at their October 27-28 meeting. Goldman Sachs expects one more 25-basis-point hike in December, and CME's FedWatch Tool shows a 91% chance of an increase.

Other precious metals also declined: spot silver fell 3.7% to $55.86 an ounce, platinum dropped 2.6% to $1,586.22, its weakest since July 2026, and palladium slid 3.2% to $1,052.88 after touching its lowest since June 2025.

why it matters

Gold is usually seen as an inflation hedge, but higher interest rates make the non-yielding metal less attractive. Traders will watch the PCE inflation report due October 29, which the Fed follows closely, for clues on the path of rates.

market impact

Gold, silver, platinum: stronger Fed rate expectations weigh on non-yielding precious metals

tags

instruments