Rising energy prices pushed gold to its weakest level since Aug. 4 on Thursday, reinforcing concern that oil-driven inflation could keep U.S. interest rates elevated.
Reuters reported spot gold fell 1.9%, reaching $4,060.37 an ounce at 7:34 a.m. ET (11:34 UTC) Thursday. It was bullion’s lowest price since Aug. 4. The move extended the retreat from the $4,115.96 quote in EconoTimes’ Wednesday gold update.
Reuters linked pressure on bullion to oil’s climb. Brent crude reached its highest level since May after Houthi attacks in Saudi Arabia raised concern that conflict could spread and supplies could be disrupted, Reuters reported. Higher interest rates can weigh on gold’s appeal because the metal pays no interest, the outlet said.
Gold had already slipped below $4,100 in Asian trading, even as the U.S. dollar faced selling and Treasury yields declined, FXStreet reported earlier Thursday.
The U.S. Bureau of Labor Statistics (BLS) said the Consumer Price Index (CPI) rose 3.7% over the 12 months through September and 0.6% from August. Gasoline prices climbed 9.1% during the month. In separate data, the BLS reported the Producer Price Index (PPI) for final demand was up 6.3% over 12 months and 1.3% from August.
At its Sept. 16 meeting, the Federal Reserve raised the federal funds target range by 25 basis points to 3.75%-4.00%. Minutes from the meeting indicated that most participants thought rates might need to rise again before year-end. The minutes also said officials would weigh incoming information when making subsequent policy decisions.
The Fed’s next meeting is scheduled for Oct. 27-28. The September Personal Income and Outlays report, which includes the PCE price index, is due Oct. 29 at 8:30 a.m. ET, according to the Bureau of Economic Analysis release schedule.
