Global Markets Focus on Fed Decision as Energy Costs Rise
While the increase in energy prices fuels inflation concerns, expectations that the US Federal Reserve will raise interest rates have led to a decline in gold prices.
While a rise of over 2 percent in oil prices heightened global inflation concerns, expectations that the US Federal Reserve will raise interest rates this week drove gold prices down. Spot gold prices recorded a decline.
Effects of the Rise in Oil Prices
Oil prices started the week with an increase of over 2 percent, escalating concerns about supply security.
Developments in Saudi Arabia and the Gulf region, along with the closure of a pipeline, increased pressure on the markets.
Fed and Interest Rate Hike Expectations
The probability of the US Federal Reserve raising interest rates at its meeting this week rose to 86.5 percent in the markets.
Data indicating that consumer prices accelerated in August strengthened expectations for a rate hike.
Gold and Other Precious Metals
Spot gold prices dropped 0.3 percent to $4,334.31 per ounce, while futures contracts also experienced declines.
Among other precious metals, spot silver fell 0.7 percent, while platinum and palladium maintained their levels.
Monetary Policies of Central Banks
While the Bank of Japan is also expected to raise interest rates on Friday, the high interest rate environment reduces the appeal of gold.
The expectation that major central banks will continue their tight monetary policies is being closely monitored in the markets.