Gold prices and energy costs warning ahead of Fed interest rate decision

While global markets are starting a volatile week under the influence of central bank interest rate decisions and geopolitical developments, Onur Can Bal, Deputy Director of Investment Advisory at Gedik Yatırım, made evaluations regarding the Fed's policy and the course of gold prices.

Stating that the Fed is expected to keep interest rates steady at its meeting this week, Onur Can Bal expressed that the decision text and the Fed Chair's statements will be closely monitored. Bal noted that high oil prices and inflation risks reinforce the cautious stance of central banks, and the possibility of another interest rate hike in December could come to the agenda. It was also emphasized that the European and Japanese central banks are expected to keep interest rates steady at their meetings this week, and the high course of energy costs may cause tight monetary policy to continue for a longer period.

Conveying that a weak trend has come to the forefront in gold prices recently, Bal stated that ounce gold is trading around the 4,000 dollar region. Expressing that high energy costs can increase inflation pressure and steer central banks toward a tighter monetary policy, and that this situation creates pressure on gold prices, Bal said that energy prices and geopolitical developments will be decisive for the direction of gold in the coming period. Bal noted that a potential decline in oil prices could support a recovery for gold, while if energy costs remain high, the pressure may continue.