United States — Gold Faces Sharpest Weekly Decline in Months as Oil Fuels Inflation Fears
Gold prices fell slightly on Friday as increasing energy costs heightened concerns about persistent inflation and dampened expectations for near-term interest rate cuts in the United States. The metal was on track for its largest weekly decline in more than four months as investors reconsidered the outlook for monetary policy.
Spot gold dropped 0.3% to $4,013.34 per ounce by 0815 GMT, recovering modestly after hitting its lowest level since July 20 earlier in the session. Prices had declined 3.6% over the week, putting bullion on course for its weakest weekly performance since June.
US gold futures for December delivery fell 0.8% to $4,028.00.
Gold has come under pressure as rising oil prices fuel concerns that inflation could remain above central banks’ targets. Higher energy costs can increase expenses for businesses and households, potentially making it more difficult for policymakers to reduce interest rates.
Because gold does not pay interest, it tends to become less attractive when investors anticipate persistently high interest rates and bond yields. A stronger US dollar can add further pressure by making the metal more expensive for buyers using other currencies.
Monte Safieddine, head of market research at Capital.com, said investors were trying to defend the $4,000-per-ounce level. A sustained break below that threshold could suggest markets were increasingly pricing in prolonged inflation, elevated yields and a stronger dollar instead of relief from high interest rates.
Oil prices rose on Friday following Houthi attacks in Saudi Arabia, raising concerns about potential disruptions to Middle Eastern energy supplies. Further increases in crude prices could intensify inflation concerns and complicate the Federal Reserve’s policy decisions.
Safieddine cautioned that additional geopolitical escalation could drive oil prices higher, pushing up inflation expectations and yields while postponing monetary easing. Such a combination would create an unfavorable environment for gold.
Investors are turning their attention to the Federal Reserve’s October 27–28 policy meeting and the forthcoming Personal Consumption Expenditures inflation report. The PCE index is especially significant because it is the central bank’s preferred measure of inflation as it works toward its 2% target.
Most market participants expect the Fed to keep interest rates unchanged at its next meeting. However, expectations of a rate increase in December remain substantial, with the probability of a hike at 80%.
Changes in energy markets and the next inflation reading could therefore significantly influence expectations for US monetary policy and the direction of precious-metal prices.
Other precious metals also declined. Spot silver lost 1.2% to $53.85 per ounce, while platinum fell 0.7% to $1,559.76. Palladium remained steady at $1,053.41. All three metals were headed for weekly losses.
Separately, HSBC analysts reduced their average price forecasts for platinum and palladium in 2026 in a research note released on Thursday, pointing to shifts in market fundamentals and investor liquidation.
Gold investors are now watching whether the metal can maintain its position above $4,000 per ounce, while developments in oil prices, inflation and interest rate expectations continue to shape demand.
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