Gold prices edged lower on Wednesday (October 28) as rising oil prices reignited inflation concerns, while investors awaited a policy decision from the Federal Reserve and commentary from Kevin Warsh. Spot gold fell 0.3% to approximately US$4,044 per troy ounce.
The Fed is expected to keep interest rates in the 3.75%–4% range. However, the market sees an 84% probability of a rate hike in December, shifting the focus toward whether Warsh might offer a hawkish signal regarding future policy.
Pressure on gold intensified following a more than 1% rise in oil prices, triggered by an attack on a refinery in Saudi Arabia. Higher energy costs could exacerbate inflationary pressures, potentially prompting the Fed to maintain a tight monetary policy for longer.
Investors are also looking ahead to Thursday’s U.S. PCE data, a key inflation gauge for the Fed. The figures may provide further clues on the trajectory of interest rates, especially if price pressures show signs of strengthening.
From a fundamental perspective, higher interest rates increase the opportunity cost of holding gold, an asset that yields no return. Price projections for precious metals in 2026 have also been revised downward due to weaker demand, high Treasury yields, and a strong U.S. dollar, though a recovery is still anticipated by 2027.
Conversely, demand from China has provided some support. In September, China’s net gold imports via Hong Kong rose by more than 28% from August—reaching a five-month high—driven by restocking efforts and investor demand.