Gold prices ticked lower on Wednesday after the previous session’s climb of about 1%. Spot gold fell 0.7% to $4,030.20 per ounce. Soni Kumari said, "Gold is moving based on the interest rate expectations and inflation risks because of higher energy prices." Investors now await the Federal Reserve’s policy decision today.
Gold prices ticked lower on Wednesday after the previous session's climb of about 1 per cent, as higher oil prices stoked inflation fears while investors awaited the Federal Reserve's policy decision later in the day for clues to the rate outlook.
Spot gold was down 0.7 per cent at $4,030.20 per ounce by 0602 GMT. US gold futures for December delivery dropped 0.8 per cent to $4,043.0.
"Gold is moving based on the interest rate expectations and inflation risks because of higher energy prices," said Soni Kumari, an analyst at ANZ.
"As a result, the Fed will remain cautious, which remains a short-term key headwind for gold."
Oil prices climbed more than 1 per cent on Wednesday after an attack on a refinery in Saudi Arabia renewed concerns around supply risks from the major exporter.
Elevated energy prices raise expectations that the Fed will keep interest rates higher for longer, increasing the opportunity cost of holding non-yielding bullion.
Markets await the Fed's policy decision due at 1800 GMT, along with the Personal Consumption Expenditures data on Thursday, a key gauge closely watched by the central bank as it targets a 2 per cent inflation rate.
Traders largely expect the Fed to leave rates unchanged today but are pricing in a chance of about 84 per cent for a December rate hike, according to the CME's FedWatch Tool.
High inflation will persist in the global economy well into next year, according to hundreds of economists polled by Reuters.
Meanwhile, analysts cut their 2026 gold price forecast for a second straight quarter due to high Treasury yields, a strong US dollar and expectations that rates will stay higher for longer, but still expect a recovery in 2027, a Reuters survey showed.
Among other metals, spot silver slid 1 per cent to $53.82 per ounce, platinum lost 0.9 per cent to $1,526.74 and palladium steadied at $1,025.63.