Gold prices slipped to $4,120 an ounce on Tuesday as a sharp rise in oil fueled fresh inflation concerns and led investors to reassess the US interest rate outlook ahead of next week’s Federal Reserve meeting. Brent crude rose to a five-month high following renewed Houthi attacks and reports of vessel strikes in the Gulf, intensifying worries about regional supply disruptions and bolstering expectations of tighter monetary policy.
Although the Fed is widely expected to keep rates unchanged next week, investors will closely watch its forward guidance for signals on a possible rate hike in December. Market pricing now implies more than a 90% probability of an increase, according to the CME FedWatch Tool. While gold is traditionally considered a hedge against inflation, higher interest rates tend to weigh on the metal by making yield-bearing assets more attractive in comparison.
