Gold prices fell toward $4,100 an ounce on Thursday, wiping out the previous session’s gains as renewed tensions in the Middle East drove oil prices higher and stoked inflation worries. Crude oil rose after a drone strike on Saudi Aramco’s Shaybah field killed two people, while the United States ordered certain personnel and family members to leave its embassies in Saudi Arabia.
At the same time, the US Federal Reserve is widely expected to leave interest rates unchanged next week, after Chair Kevin Warsh’s comments last Friday did little to shift expectations for a pause. Still, markets continued to price in the possibility of a Fed rate increase in December, given ongoing energy-related inflation pressures. The European Central Bank and the Bank of Japan are also expected to keep their benchmark rates steady next week.
Although gold is traditionally viewed as an inflation hedge, its lack of yield makes it less attractive in a rising interest-rate environment.
