Gold set for sharpest weekly drop in four months as oil lifts Fed hike bets

what happened

Gold slipped on Friday and was on course for its sharpest weekly fall in more than four months, Reuters reports. At 0554 GMT spot gold was down 0.1% at $4,021.04 an ounce, after earlier dipping to its lowest level since July 20. The metal has shed 3.6% so far this week.

Oil climbed after Houthi attacks on Saudi Arabia raised worries about further disruption to energy supplies. Pricier energy feeds inflation expectations and makes investors doubt that the Fed will ease policy soon. Bullion pays no interest, so with yields rising it becomes less attractive. Most traders expect the Fed to hold rates at its October 27-28 meeting, but the odds of a December hike stand at 76%. Investors are also watching next week's PCE inflation data.

Other metals moved in mixed fashion. Spot silver fell 0.4% to $54.31 an ounce, while platinum and palladium each gained 0.3%, to $1,574.33 and $1,056.49. All three remain on track for weekly losses. On Thursday, HSBC analysts cut their average 2026 platinum and palladium price forecasts, citing shifting fundamentals and investor liquidation.

why it matters

Gold is sensitive to real yields and the dollar. If elevated oil keeps alive expectations of tighter policy, pressure on the metal may persist. Traders are watching whether the $4,000 level holds, since a clear break below would suggest markets have stopped pricing rate relief and started pricing sticky inflation.

market impact

Gold and silver: higher oil boosts Fed hike bets and yields, weighing on precious metals.

tags

instruments