$4,130 an ounce. That is roughly where gold was changing hands around midday Makkah time on Wednesday, 21 October, after dipping to about $4,105 earlier in the session as stubbornly high oil prices kept inflation worries alive.
The metal had already lost ground on Tuesday. Reuters reported spot gold down about 0.5% at $4,120.87 an ounce, with US gold futures for December delivery at $4,139.90. Over the past month gold has given up around 5.4%, leaving it well short of the record $5,608 it reached in January.
Oil is doing most of the damage. Brent crude is trading close to $110 a barrel, near a five-month high, and US benchmark WTI is around $99. Expensive energy feeds through to consumer prices, and that raises the odds that the Federal Reserve keeps tightening policy.
Traders are now pricing in a better than 90% chance of a rate rise at the Fed's December meeting, according to CME Group's FedWatch tool, even though policymakers are widely expected to hold rates at their 27-28 October meeting. The Fed raised rates in September for the first time in three years. Ricardo Evangelista, chief executive of ActivTrades, said "Persistent inflationary pressures, driven by high energy prices, continue to support expectations" of further tightening. Because gold pays no interest, higher rates make it less attractive to hold.
Other precious metals moved the same way. Silver slipped about 0.7% to roughly $57.50 an ounce, platinum shed close to 0.9% to $1,633, and palladium was the weakest of the group, down nearly 1.5% at $1,070.
Next on the calendar is the US personal consumption expenditures report, the Fed's preferred inflation gauge, due next week.
