GLOBAL — Gold prices edged higher on Monday as declining oil prices eased inflation concerns, providing support for the precious metal ahead of the next U.S. Federal Reserve monetary policy meeting.
Spot gold rose 0.2% to $4,171.65 per ounce by 0853 GMT, while U.S. gold futures for December delivery gained 0.26% to $4,191.90 per ounce.
Oil prices had retreated from a five-month high after U.S. President Donald Trump decided to waive sanctions and tariffs on Russia. The move could permit additional Russian fuel exports, potentially reducing pressure on energy prices.
The decline in oil prices has become a significant factor in the inflation outlook, following recent U.S. consumer and producer price reports that indicated persistent price pressures, partly attributable to rising gasoline costs.
Investors are evaluating whether the changing energy market could affect the Federal Reserve’s interest-rate decisions. The central bank is widely expected to keep rates unchanged at its next meeting, while forthcoming personal consumption expenditures data will offer another key indicator of inflation.
UBS analyst Giovanni Staunovo said lower oil prices were reducing pressure on the Federal Reserve, helping support gold prices. He added that the metal was holding up despite a stronger U.S. dollar, with demand for assets considered safe havens benefiting both.
Data from the CME FedWatch Tool showed traders were assigning a 15% probability to an interest-rate increase this month. Expectations of a rate hike in December remained substantially higher, reaching 89%.
Interest rates play an important role in gold’s performance because the metal does not generate interest income. Higher rates can make interest-bearing assets more appealing, whereas expectations of lower rates can strengthen gold’s relative attractiveness.
Staunovo said the Federal Reserve meeting might not be the primary driver of gold prices if policymakers leave rates unchanged. Instead, investors are expected to concentrate on new inflation and labor-market figures to gauge the likely direction of monetary policy.
The European Central Bank faces a different policy outlook. The International Monetary Fund said on Friday that the ECB would likely need to raise interest rates by 25 basis points at least once more this year to address inflationary pressures.
Other precious metals also advanced on Monday. Spot silver increased 0.85% to $57.49 per ounce, platinum climbed 1.27% to $1,651.05 per ounce, and palladium gained 1.17% to $1,125.44 per ounce.
Gold investors remain focused on how energy prices, inflation and central-bank decisions interact. Falling oil prices could reduce one source of inflationary pressure, but future interest-rate decisions will continue to depend on incoming economic data.
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