Gold slips below $4,300 as oil surge fuels Fed rate-hike bets

As per the latest business developments, Rising crude prices and renewed inflation concerns are weighing on gold as market participants brace for the The US central bank’s policy decision later the current week.

Spot gold prices eased below the $4,300-an-ounce mark around 2:50 pm IST on Monday, extending losses after the precious metal had already declined for three consecutive weeks. Gold declined further to around $4,290.5 an ounce, well below its recent August-September highs.

The retreat comes despite gold’s firm performance during the past year, with prices still up around 16.6 percent. The metal had advanced above $4,600 an ounce in recent weeks, leaving it vulnerable to earnings-taking as market participants reassess the outlook for interest rates and inflation.

A fresh surge in oil price marks (at present standing at $102.62 a barrel) has further noted to the pressure. Crude prices moved towards four-month highs on Monday after Saudi Arabia shut its key East-West pipeline following drone attacks. The disruption, alongside wider supply and shipping risks stemming from the Middle East conflict, has revived concerns that elevated energy costs could keep global inflation elevated.

That has strengthened expectations of a more hawkish The US central bank. Markets are now pricing in roughly a 90 percent probability of a 25-basis-point interest-rate gain on Wednesday, according to Reuters. Elevated interest rates tend to weigh on gold because the non-yielding asset becomes less attractive relative to interest-bearing investments.

The latest US inflation data has reinforced those concerns. Consumer prices rose 0.4 percent in August, following a 0.1 percent gain in July, while annual inflation stood at 3.4 percent. Core CPI, which excludes food and energy, increased 0.3 percent in August.

In the meantime, hopes for a diplomatic breakthrough in the Middle East have softened after a scheduled meeting involving Iran and Gulf states was postponed. The uncertainty has kept crude prices elevated and further noted another layer of inflation risk for central banks.

In India, MCX gold futures were trading at Rs 1,52,655 per 10 grams, down Rs 129 from the previous close of Rs 1,52,784. The contract moved between an intraday low of Rs 1,50,600 and a high of Rs 1,53,836.