Gold steadied after its biggest weekly drop since June, as traders weighed stubbornly high energy prices ahead of the Federal Reserve's upcoming policy meeting. Bullion traded either side of $4,000 an ounce, after falling more than 4% last week to the lowest since July.
Oil edged back from a six-month high after President Donald Trump told Fox News that he was nearing a decision on whether to make a deal with Iran or resume attacks. US consumer sentiment slipped to a five-month low in October, adding to the uncertainty facing markets.
Expectations for the Fed's interest-rate path have shifted over the past month. Traders initially raised bets on an October hike after hotter-than-expected inflation prints, before comments from central bank officials reined in such forecasts. The market is now pricing in a roughly 10% chance that the Fed will increase rates when it meets later this week, although inflationary pressure from elevated energy prices has prompted bets on a hike before year-end. Higher borrowing costs are a headwind for gold, which pays no interest.
Gold has fallen by about a quarter since the US-Iran war began in late February, driven down by tighter monetary policy as major economies attempt to rein in inflation. Last week's dip below $4,000 was also spurred by a rotation out of artificial intelligence-related stocks into bonds, with gold sold off as investors tried to cover equity losses. Spot gold slipped 0.1% to $3,993.20 an ounce in Singapore. Silver climbed 0.5% to $54.12 an ounce, having given up 5.4% last week. The Bloomberg Dollar Spot Index fell 0.1%.
Source: Bloomberg Markets · Summarized by HeadlinesBriefing