Gold traded near $3,995 an ounce in early Asian trading Monday, while futures-based estimates favored a Federal Reserve hold this week and a possible December increase as oil prices climbed.
FXStreet reported the Monday price near $3,995 per troy ounce. Reuters said a Friday low of $3,975.23 marked gold’s first move below $4,000 since mid-July; at 11:20 a.m. ET (15:20 UTC), it quoted spot gold at $3,998.35.
Reuters reported Brent crude settled at $116.72 a barrel Friday, up 3.14%, while U.S. West Texas Intermediate closed at $103.27, up 3.8%. Reuters linked the gains to concerns about supply disruption after attacks in Saudi Arabia. A Gulf Cooperation Council statement carried by the Saudi Press Agency said attacks attributed to Houthi forces targeted King Fahd International Airport in Dammam and the Shaybah oil field in Saudi Arabia’s Eastern Region. The statement reported deaths, injuries and material damage.
The Bureau of Labor Statistics said the Consumer Price Index rose 3.7% over the 12 months through September. The energy index gained 20.4% over that period, including a 5.2% increase in September. The Federal Reserve’s September meeting minutes attributed most of the rise in near-term inflation compensation to oil prices. The Fed raised its target range by 25 basis points to 3.75%-4%, effective Sept. 17.
Reuters reported Friday that CME FedWatch estimates implied a 92% chance of no change at the Oct. 27-28 meeting and a 78% chance of a December increase. FXStreet’s later Sunday snapshot put those probabilities at 90.6% and 79.4%, respectively. CME says the estimates draw on 30-day federal funds futures prices. Ryan McKay, senior commodity strategist at TD Securities, told FXStreet that concerns about oil, interest rates and the Fed’s policy direction were weighing on gold. FXStreet also noted that rate expectations can affect gold’s appeal because bullion offers no yield.
The Federal Reserve’s next policy meeting is scheduled for Oct. 27-28. The Bureau of Economic Analysis is scheduled to release September personal income and outlays data, including the PCE price index, at 8:30 a.m. ET Thursday, Oct. 29.
