Gold prices in global markets faced renewed selling pressure on the final trading day of the week. Spot gold fell 0.6 percent to 3,997.39 dollars per ounce, dropping below the 4,000 dollar threshold. December US gold futures also lost the same amount, falling to 4,007.80 dollars.
The decline was driven by rising oil prices, which heightened inflation concerns, and strong inflation data from the US that altered monetary policy expectations. Markets are reportedly pricing in an approximately 75 percent probability of an interest rate hike by the US Federal Reserve (Fed) in December.
High interest rates increase the opportunity cost of holding gold, which does not provide interest or regular returns. Consequently, strengthening expectations for interest rate hikes are creating downward pressure on the precious metal. With this outlook, gold is heading for its second consecutive monthly loss.
OIL AND INFLATION PRESSURE
The rise in oil prices has also been one of the prominent topics in market pricing. As the upward trend in oil continues due to concerns over global supply security following attacks on Saudi Arabia, it is assessed that inflationary pressure via energy costs may persist.
Another development increasing concerns about the global inflation outlook was core inflation in Tokyo exceeding the 2 percent target in October. This picture has led investors to reassess the balance between safe-haven demand and interest rate expectations.
The decline in gold also reflected on other precious metals. Silver fell 2.1 percent to 51.27 dollars, platinum dropped 1.9 percent to 1,458.85 dollars, and palladium declined 2 percent to 986.08 dollars. Thus, selling pressure became evident across precious metals.
News Source: 12punto
