Gold Falls as Oil Spikes and Rate Hike Odds Jump to 87%
Spot gold dropped 0.92% to $4,284.52 as crude oil prices surged 4%.
Spot gold price declined 0.92% to $4,284.52 per ounce. This marked the third consecutive weekly decline for the metal. US gold futures fell 1.1% to $4,361.20. Spot silver dropped 1.30% to $62.96 per ounce.
Brent crude oil rose 4% to $108.80 per barrel. West Texas Intermediate crude increased 3.59% to $103.60. These gains followed new attacks on Saudi infrastructure and shipping lanes in the Gulf. Energy costs are rising without signs of diplomatic de-escalation.
Hawkish Fed expectations pressure precious metals
Traders now price in an 87% chance of a US rate hike. This probability rose from 67% after recent inflation data. The CME FedWatch Tool tracks these market expectations. Higher interest rates reduce the appeal of non-yielding assets like gold.
The Bank of Japan is also expected to raise rates on Friday. Persistent inflation and resilient growth in Japan drive this move. Global central banks are tightening policy amid rising energy costs. This environment creates headwinds for commodity prices.
Domestic gold prices decline across Indian cities
Gold October 5 futures on the MCX fell 1.26%. The contract closed at ₹1,50,856 per 10 grams. Silver December 4 futures dropped 1.90% to ₹2,30,513 per kilogram. Trading resumed after a holiday closure on the exchange.
Physical gold prices in Delhi stood at ₹15,424 per gram for pure gold. In Mumbai, 24-carat gold was priced at ₹15,409 per gram. Chennai and Hyderabad recorded similar rates for pure gold. Standard 22-carat gold prices varied by city due to local taxes.
Oil supply risks drive energy inflation
Houthi strikes on Saudi Arabia caused the spike in crude prices. Iranian attacks on ships added to supply concerns. A key Saudi oil pipeline remains closed. Diplomacy between Iran and Gulf states has stalled after a postponed meeting.
Analysts at LKP Securities see gold trading between ₹1,49,000 and ₹1,54,000. They cite the upcoming Fed decision as a key risk. Hawkish commentary from the Fed chair could extend the decline. The metal faces pressure from higher real yields and strong oil prices.
