Gold slipped in early Asian trading on Tuesday as investors awaited the US Federal Reserve’s policy decision next week for signals on interest rates and the broader monetary outlook. Spot gold fell 0.3 percent to 4,126.84 dollars per ounce by 0102 GMT, while US gold futures for December delivery dropped 0.3 percent to 4,146.00 dollars. Monday’s settlement in the market tables was 4,139.10 dollars, down 0.5 percent on the day and 0.91 percent on the week.
Investor focus has shifted to the Fed’s October 27 to 28 policy meeting and next week’s US Personal Consumption Expenditures data, the central bank’s preferred inflation gauge as it targets 2 percent inflation. The Fed raised its benchmark rate by 25 basis points in September to a range of 3.75 to 4.00 percent. According to CME’s FedWatch tool, traders are pricing an 83 percent chance the central bank leaves rates largely unchanged next week, while expectations for a hike in December stand at 94 percent. Higher interest rates typically weigh on gold because they raise the opportunity cost of holding bullion, which pays no interest. Bloomberg’s account of Monday’s session made the same point in its headline: gold held its decline as energy led inflation weighed on the rate path.
The geopolitical bid that might normally offset that pressure was absent. Yemen’s Iran-aligned Houthis said on Monday they had carried out several attacks against Saudi energy, airport and military targets, claims carried in today’s Brent story as unverified, and bullion still fell. Bank of Japan Governor Kazuo Ueda added to the global tightening tone, saying underlying inflation is “quite close” to the bank’s 2 percent target, with strong global AI demand adding to inflation pressure from a tight job market, signalling scope for further rate increases. Among other metals, spot silver slid 0.7 percent to 56.69 dollars an ounce in the same session, platinum steadied at 1,639.65 dollars and palladium dropped 0.7 percent to 1,112.08 dollars.