Gold prices declined for a third consecutive session on Tuesday as rising oil prices intensified inflation concerns and raised uncertainty over the Federal Reserve's interest rate outlook ahead of its upcoming policy meeting.
Spot gold slipped 0.1% to $4,137.84 per ounce by 02:22 GMT, while U.S. gold futures for December delivery dropped 0.1% to $4,165.34. The precious metal had already fallen 0.6% on Monday, extending losses following a weaker weekly performance.
The decline comes as investors reassess expectations for U.S. monetary policy amid persistent inflationary pressures. Higher energy costs could force the Federal Reserve to maintain elevated interest rates or introduce further tightening to control consumer prices.
Gold typically faces downward pressure when interest rates and Treasury yields increase because the non-yielding metal becomes less attractive compared with interest-bearing investments.
Meanwhile, Brent crude oil remained above $109 per barrel on Tuesday after reaching a five-month high of $110.70 in the previous session. Growing concerns about potential supply disruptions in the Middle East have supported oil prices despite speculation that Washington could ease restrictions on Russian energy exports.
Geopolitical tensions intensified after Yemen's Iran-aligned Houthi group claimed responsibility for attacks targeting Saudi Arabian energy infrastructure, airports and military facilities, including an Aramco installation. The developments heightened fears of further disruptions to global oil supplies.
Investors are now closely watching the Federal Reserve's October 27-28 meeting. According to the CME FedWatch Tool, markets assign an 83% probability that policymakers will leave interest rates unchanged next week, while expectations for a December rate increase stand at 94%.
The Fed previously raised its benchmark interest rate by 25 basis points in September, bringing the target range to 3.75%-4.00%.
Attention is also shifting toward the upcoming U.S. Personal Consumption Expenditures (PCE) price index, a key inflation indicator used by the central bank to guide monetary policy decisions.
Recent economic figures showed U.S. consumer inflation accelerating to 3.7% annually in September, while gasoline prices jumped 9.1%, reinforcing concerns about sustained price pressures.
Elsewhere in precious metals markets, spot silver gained 0.1% to $57.1325 per ounce, while platinum advanced 0.5% to $1,650.65.
Gold's near-term direction will likely depend on oil price movements, upcoming inflation data and signals from Federal Reserve policymakers.
