Gold gains on softer oil prices; Fed decision in focus

Gold advanced on Monday as weaker oil prices eased inflation worries, with investors focused on the Federal Reserve’s decision due on October 28. Business Recorder reported spot bullion up 0.4% to $4,009.87 an ounce at 0342 GMT, after reaching its weakest level since mid-July in the prior session. December US gold futures also added 0.4%, reaching $4,023.50.

The modest recovery follows a 4% weekly loss, the metal’s largest since June. Oil retreated after approaching a six-month peak late last week, while attacks on Saudi Arabia continued to raise supply concerns and mediators sought to reduce regional tensions. Traders mostly expect the Fed to hold rates steady this week, but the probability of a December increase stood at 75% on CME’s FedWatch Tool; US PCE inflation data is due the following day. Higher rates can weigh on non-yielding gold, while October US business activity slowed slightly and companies raised prices.