Gold slipped to US$4,134 ($5,932) an ounce on Wednesday afternoon (7 October), down 0.74% from the previous session as a rebound in oil prices and elevated Treasury yields weighed on bullion.
The decline partly reversed gold’s gains from recent sessions, with oil prices rebounding amid renewed concerns over Middle East supply disruptions.
According to Trading Economics, oil prices advanced as Iran intensified attacks on tankers in the Strait of Hormuz in recent days, while Saudi forces continued to clash with the Houthis.
Treasury yields also remained near multi-decade highs amid concerns over persistent inflation, rising fiscal risks, and elevated AI-related debt issuances.
Meanwhile, markets are also pricing in an almost 80% probability that the US Federal Reserve will leave interest rates unchanged this month. This follows weaker-than-expected job growth in September and downward revisions to payrolls for the previous two months.
Investors are now awaiting minutes from the Fed’s latest meeting for further signals on the direction of monetary policy.
Despite Wednesday’s decline, gold remains higher over the longer term. The precious metal is down 5.11% over the past month, but remains 2.24% higher than a year ago.
The pullback also comes as market expectations for gold remain relatively bullish into next year. According to a London Bullion Market Association survey, there is potential for a 22% upside from current gold price levels.
For gold investors, the competing forces of interest rates, inflation, geopolitical risk, and oil prices continue to shape gold’s outlook.
Write to Aaliyah Rogan at Mining.com.au
Main image: ABC Bullion
