Gold Rises as Softer Oil Eases Inflation Fears
Investors assess the Federal Reserve’s next move as lower crude prices offer support to bullion ahead of key US inflation data.
Gold prices edged higher on Monday, October 19, as softer oil prices eased some inflation concerns and investors assessed the outlook for US interest rates. Spot gold rose 0.3% to $4,175.60 per ounce by 0259 GMT, while US gold futures for December delivery gained 0.4% to $4,196.40, according to Reuters.
The decline in oil prices helped support bullion by reducing some concerns that rising energy costs could intensify inflation and prompt central banks to maintain tighter monetary policies. Lower inflation pressure can improve gold’s appeal because the metal does not pay interest.
Oil prices retreated after US President Donald Trump waived sanctions and tariffs on Russia in a move that could allow additional Russian fuel exports. Crude had recently climbed to a five-month high, adding to concerns about energy-driven inflation.
Despite the easing in oil prices, inflation risks remain. US import prices increased more than expected in September, partly reflecting higher energy costs and increases across a range of other goods. The data added to uncertainty over the pace at which inflation might moderate.
Investors are now looking ahead to the Federal Open Market Committee’s policy meeting and the US Personal Consumption Expenditures price index, both expected the following week. The PCE index is the Federal Reserve’s preferred inflation measure and will be closely watched for clues about the direction of monetary policy.
According to the CME FedWatch Tool figures cited by Reuters, traders were pricing in a 16% probability of a US rate increase in October and a 92% probability of an increase in December. These figures reflected market expectations at the time of the report and were not official Federal Reserve decisions.
Higher interest rates generally weigh on gold because they increase the relative attractiveness of interest-bearing assets. Market participants will therefore continue to monitor energy prices, inflation data and signals from US policymakers to assess the near-term direction of bullion.
Other precious metals also advanced in early trading. Spot silver rose 0.9% to $57.54 per ounce, platinum gained 0.7% to $1,642.29, and palladium climbed 1.5% to $1,129.13, Reuters reported.