Gold prices declined on Wednesday as rising crude oil prices heightened concerns about inflation in the United States, prompting investors to reassess the outlook for interest rates ahead of the Federal Reserve’s monetary policy announcement.
Spot gold fell 0.7% to $4,030.20 per ounce during early trading, while US gold futures for December delivery declined 0.8% to $4,043 per ounce.
The decline followed a recovery in the previous trading session, when bullion gained approximately 1% as investors responded to changing expectations surrounding global monetary policy.
However, renewed concerns about energy supply disruptions in the Middle East have placed fresh pressure on precious metals.
Oil prices increased by more than 1% following an attack on a refinery in Saudi Arabia, raising fears of further disruptions to global crude supplies.
Higher energy costs could sustain inflationary pressures in the United States, potentially forcing the Federal Reserve to maintain elevated borrowing costs for an extended period.
This development has weakened demand for gold, which does not generate interest income and typically becomes less attractive when yields on government bonds remain high.
Investors are closely monitoring the Federal Reserve’s policy decision scheduled for later Wednesday, with financial markets largely expecting the central bank to leave its benchmark interest rate unchanged.
However, traders are pricing in approximately an 84% probability of another interest rate increase in December, reflecting concerns that inflation could remain above the Federal Reserve’s target.
Attention will also turn to Thursday’s release of the US Personal Consumption Expenditures price index, a key inflation indicator used by policymakers to assess underlying price pressures.
Meanwhile, a Reuters survey of 30 analysts and traders showed that expectations for gold prices in 2026 have weakened.
The median forecast was reduced to $4,495 per ounce from $4,509 previously, reflecting the influence of elevated Treasury yields, a stronger US dollar and expectations of restrictive monetary policy.
Nevertheless, analysts raised their 2027 gold price forecast to $4,650 per ounce, suggesting expectations of a potential recovery as central-bank purchases and demand for alternative reserve assets continue.
Other precious metals also recorded losses, with silver declining 1% to $53.82 per ounce and platinum falling 0.9% to $1,526.74.
For investors, the direction of gold prices will depend significantly on the Federal Reserve’s policy signals, inflation developments and movements in global energy markets.
A prolonged period of elevated interest rates could restrict gold’s recovery, while easing inflation and a weaker dollar may provide support for renewed demand.