Gold prices climbed on Monday, supported by a drop in oil prices that eased inflation worries. Spot gold advanced 0.4% to $4,009.87 per ounce by 0342 GMT, recovering from its lowest level since mid-July. The metal had suffered a 4% weekly decline on Friday, marking its steepest weekly drop since June.
Analysts attributed the rebound to relief from lower oil prices, though gains may be limited ahead of the Federal Reserve's policy decision later this week. Kyle Rodda, senior financial market analyst at Capital.com, noted that gold's movement is closely tied to interest rate expectations and geopolitical risks.
Oil prices fell after reaching near six-month highs last week, though supply concerns persisted due to ongoing attacks on Saudi Arabia. Meanwhile, Qatari mediators were in Tehran to help ease regional tensions. Markets are now focused on the Fed's meeting on October 28 and the upcoming US Personal Consumption Expenditures (PCE) data, a key inflation gauge.
Traders anticipate the Fed will hold rates steady this week, with a 75% chance of a hike in December, according to CME's FedWatch Tool. Higher interest rates typically reduce demand for non-yielding assets like gold. Other precious metals also saw gains, with spot silver up 0.6% to $54.19 per ounce, platinum steady at $1,551.31, and palladium rising 0.6% to $1,050.50.