Gold rises as oil slump and Fed rate watch support prices

Gold prices advanced on Monday, buoyed by a decline in crude oil values while market participants evaluated the likelihood of the Federal Reserve raising interest rates later this year. Investors sought fresh indicators regarding the central bank's policy trajectory amid these developments.

Market movements and analyst views

Spot gold increased 0.3% to $4,175.60 per ounce by 02:59 GMT. US gold futures for December delivery rose 0.4% to $4,196.40. Although gold serves as an inflation hedge, higher interest rates typically reduce its appeal because the metal generates no yield.

Tim Waterer, a market analyst at KCM Trade, noted that gold recorded a slight rise at the start of the week. He stated the metal responded positively to the weak trend in oil prices from an inflation perspective. Waterer added that a more sustainable drop in oil prices or clearer declines in yields would be stronger drivers for gold in the short term, as both factors ease concerns about inflation and interest rates.

Geopolitical and economic context

Oil prices fell on Monday after US President Donald Trump exempted Russia from sanctions and tariffs, a move potentially leading to increased Russian fuel exports. Concurrently, US import prices rose more than expected in September, driven by higher energy product costs and other goods. This data provided new evidence of intensifying inflation pressures amid the ongoing conflict in the Middle East.

The People's Bank of China continued purchasing gold for the twenty-third consecutive month, defying market expectations that demand for the yellow metal would wane alongside rising interest rates.

Federal Reserve outlook and global policies

Market participants now await the Federal Open Market Committee meeting on US interest rates and personal consumption expenditure data scheduled for release next week. The Federal Reserve monitors personal consumption expenditure price measures to achieve its 2% inflation target.

CME Group’s FedWatch tool indicated that traders priced in a 16% probability of a rate hike this month and a 92% chance of an increase in December. On Friday, the International Monetary Fund stated it was likely the European Central Bank would raise interest rates by another 25 basis points at least once more this year to combat inflationary pressures.

Other precious metals performance

In other precious metals, spot silver gained 0.9% to $57.54 per ounce. Platinum rose 0.7% to $1,642.29, while palladium increased 1.5% to $1,129.13.

The savings landscape linked to gold in Egypt is shifting as part of savers' attention moves from owning the physical metal to financial instruments investing in its price movement. These tools include gold funds, insurance documents, and bank deposits, accompanied by regulatory controls protecting Egyptian savings.