Gold falls 0.3% amid rising oil prices — Asharq Al-Awsat

Spot gold fell 0.3% on Tuesday, October 20, to $4,128.92 per ounce as of 06:21 GMT. U.S. December gold futures also lost 0.3%, trading at $4,148.50 per ounce, Asharq Al-Awsat reports.

Oil fuels inflation concerns

Capital.com senior financial markets analyst Kyle Rodda linked the pressure on gold to rising oil prices amid an escalation in the geopolitical situation in the Middle East. Brent crude remained near a five-month high.

Higher energy prices typically reinforce expectations that the U.S. Federal Reserve may keep interest rates high for longer to contain inflation. Although gold is traditionally considered a hedge against inflation, higher rates reduce the metal's appeal because of the increased opportunity cost of holding it.

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Markets await Fed meeting

Recent comments from Fed officials, which did not indicate an urgent need for further monetary tightening, weakened expectations of a rate hike at the October 27–28 meeting. At the same time, according to the CME FedWatch tool, traders put the probability of a rate increase in December at 92%.

Kyle Rodda noted that the market could react significantly to any Fed decision, while keeping the rate unchanged could initially support gold. Meanwhile, Bank of Japan Governor Kazuo Ueda said that core inflation in the country is already fairly close to the 2% target, while strong global demand for AI is intensifying inflationary pressure amid a tight labor market.

Among other precious metals, silver rose 0.5% to $57.38 per ounce, platinum gained 0.4% to $1,647.05, while palladium lost 0.5% to $1,114.50.