Gold Prices Fall Ahead of Fed Decision

Gold prices fell by 0.3% in Asian markets on Tuesday as investors awaited the US Federal Reserve’s (Fed) interest rate decision and signals regarding the future direction of monetary policy.

Spot gold fell to $4,126.84 per ounce, while US gold futures for December delivery declined to $4,146.

Investors are focusing on the Fed meeting scheduled for October 27–28 and the personal consumption expenditures (PCE) data, which the central bank closely monitors to assess inflation. According to CME FedWatch data, market participants see an 83% probability that the Fed will leave interest rates unchanged at its next meeting. The probability of a rate hike in December stands at 94%.

Bank of Japan Governor Kazuo Ueda said underlying inflation is approaching the 2% target, indicating that there is room for further interest rate increases.

Higher interest rates put pressure on gold prices by increasing the opportunity cost of holding the metal, which does not generate interest income. Meanwhile, allegations that Iran-backed Houthi rebels in Yemen are targeting energy facilities, airports and military sites in Saudi Arabia have kept geopolitical risks in focus.

Among other precious metals, spot silver fell 0.7% to $56.69 per ounce, while palladium declined 0.7% to $1,112.08. Platinum remained unchanged at $1,639.65 per ounce.