Gold prices in global markets on Monday faced a slight increase due to the decline in oil prices. The price of gold per ounce for immediate delivery rose by 0.4 percent to reach $4,184. Additionally, the price of gold per ounce in the U.S. futures market for December delivery also increased by 0.5 percent, trading at $4,203.50.
Analysts Weigh In
Tim Waterer, senior market analyst at KCM Trade, commented on the rise in gold prices, stating: "Gold has started the week with a mild price increase and has reacted positively to the decline in oil prices from an inflationary perspective." He added that in the short term, the continuation of falling oil prices or a more significant drop in Treasury yields could provide the most support for gold, as both factors reduce concerns about inflation and interest rates.
Impact of Falling Oil Prices on the Market
Despite the increase in gold prices, oil prices decreased in today's trading. Market participants are awaiting the Federal Open Market Committee (FOMC) meeting regarding U.S. interest rates and the release of Personal Consumption Expenditures (PCE) price index data next week. The Federal Reserve uses this index to assess inflation and achieve its 2 percent inflation target.
According to the CME FedWatch Tool, traders estimate a 13 percent chance of an interest rate hike this month and an 89 percent chance of a rate increase in December. While gold is typically seen as a hedge against inflation, in a high-interest-rate environment, it loses its appeal as a non-yielding asset.
Position of Other Precious Metals
In the market for other precious metals, the price of silver per ounce for immediate delivery increased by 1.3 percent to reach $57.73. The price of platinum per ounce also rose by 1.1 percent to $1,647.75, and palladium per ounce increased by 1.7 percent to $1,131.29.
In this context, the International Monetary Fund announced that the European Central Bank is likely to raise interest rates by 0.25 percentage points at least once more this year to combat inflationary pressures.
