Gold slipped to its lowest level in more than two months on Thursday, as a rally in oil prices heightened inflation worries ahead of the Federal Reserve's policy decision next week, Reuters reported. Spot gold slid 1.9% to $4,060.37 per ounce by 1134 GMT, its lowest level since August 4, while US gold futures for December delivery fell 1.8% to $4,075.70 per ounce.
Source: Reuters via Kitco, Oct 22
Yaani: at about ₹94.5 to the dollar, $4,060 an ounce is roughly ₹3.84 lakh an ounce — yaani about ₹1.23 lakh per 10 grams at that spot rate, before local taxes and charges.
Brent prices rose to their highest since May after more Houthi attacks in Saudi Arabia stoked concerns over a broader escalation and further disruptions to crude supplies from the world's key exporting region, Reuters said. Earlier on Thursday, Brent crude futures had risen 1.2% to $110.11 a barrel and US West Texas Intermediate crude had gained 1% to $98.12, CNBC TV18 reported via TradingView.
Source: CNBC TV18 via TradingView, Oct 22
"Gold prices can fall further... because we are still seeing a lot of uncertainty around the energy market," said Soni Kumari, analyst at ANZ, quoted by Reuters. While gold is typically considered a hedge against inflation, higher interest rates reduce the appeal of the non-yielding asset, Reuters noted.
US consumer and producer inflation data came in hotter than expected last week, largely on higher energy costs, strengthening the case for tighter policy even though Fed officials are still expected to hold off when they meet on October 27-28, Reuters said. Traders are pricing in an 86% likelihood of a December increase, according to CME's FedWatch Tool, and Goldman Sachs expects one more 25-basis-point hike in December, lifting the peak policy rate range to 4.00%-4.25%.
"Given that the PCE data will show that prices rose at an uncomfortably high pace for the Fed, the FOMC communications may strike a hawkish tone and that could weigh on gold prices," said Hamad Hussain, climate and commodities economist at Capital Economics, quoted by Reuters. US Personal Consumption Expenditures data is set for release on October 29.