Spot gold prices rose by approximately 1% to US$4,055.14 per troy ounce on Tuesday (October 27), after having touched a low of US$3,987.14. This gain occurred as oil prices weakened—alleviating some concerns regarding inflation—while investors awaited a decision from the Federal Reserve for clues on the future direction of U.S. interest rates.
Oil prices fell by more than 1% as the market monitored developments in Middle East peace talks. Nevertheless, energy prices remain elevated due to the conflict involving the Houthis and Saudi Arabia, as well as the potential for new U.S.-Israeli military actions. Should oil prices climb again, inflationary pressure could intensify, prompting the central bank to maintain a restrictive policy—a scenario that poses a risk to gold.
The market’s primary focus is currently on the Federal Reserve’s decision. While the U.S. central bank is not expected to raise interest rates this week, the market still assigns an approximately 83% probability to a rate hike in December. Higher interest rates increase the opportunity cost of holding gold, an asset that yields no return.
Investors are also awaiting U.S. PCE (Personal Consumption Expenditures) data on Thursday—a key inflation indicator closely monitored by the Fed as it works toward its 2% target. This data may provide further insight into the likely trajectory of monetary policy toward the end of the year.
Meanwhile, gold price projections for 2026 have been revised downward for the second consecutive quarter, pressured by high Treasury yields, a strong U.S. dollar, and expectations that interest rates will remain elevated for longer. Despite this, analysts still anticipate a potential recovery for gold by 2027.
In other metals markets, silver rose 0.5% to US$54.20, and platinum gained 0.3% to US$1,530.75, while palladium fell 2.1% to US$1,027.67. This movement indicates that the precious metals market continues to face pressure from expectations of high interest rates, even though gold has received support from a decline in energy prices.