Gold falls 1.5% to $4,082.56 as oil rises ahead of Fed meeting

Key Facts

Spot gold fell 1.5% to $4,082.56 an ounce on Thursday, October 22, according to an update published by Investing.com at 12:57 GMT. The decline came as oil prices rose amid escalating tensions in Saudi Arabia and ahead of the Federal Reserve's October meeting. In early trading, Brent crude futures rose 1.2% to $110.11 a barrel, according to a Reuters report. Crude's gains stood at $1.29 at 00:34 GMT. On security developments, Reuters cited a U.S. State Department spokesperson as saying the department had ordered non-essential government employees and their family members to leave Saudi Arabia. The departure order came amid Houthi attacks, according to the report. The decision specifically covered employees and their families in Saudi Arabia, the U.S. spokesperson said.

The metal's losses followed a decline in the Tuesday, October 20 session, when spot gold fell 0.4% to $4,122.41 an ounce, according to Investing.com. That price was recorded at 19:31 GMT, before the decline reported in Thursday's update. More broadly, Reuters reported on October 20 that gold was about 26.4% below its January record high. That peak stood at $5,594.82 an ounce, placing October's declines in the context of losses following its record levels early in the year. In the oil market, Brent had settled at $99.25 a barrel in the September 22 session, down 1.1%, according to the Associated Press, before the current rally. Thursday morning's market moves extended to U.S. stock index futures, which Reuters said fell sharply. The agency added that the decline also dragged U.S. Treasury yields lower in a wave of risk aversion.

The rise in oil coincided with an earlier acceleration in U.S. consumer prices in September, according to the U.S. Bureau of Labor Statistics. Headline inflation reached 3.7% year-on-year, compared with 3.4% in August, reflecting a larger increase in prices over the twelve months through September. Among the index's components, gasoline prices rose 9.1% in September alone. The bureau said gasoline accounted for "more than half" of the monthly increase in the headline consumer price index. Gasoline thus emerged as a major contributor to the month's price increases, alongside a rise in the annual inflation rate compared with August.

In the monetary policy backdrop, the Federal Reserve raised its target interest rate range in its September decision, according to the central bank's statement. The increase was a quarter of a percentage point, taking the target range to 3 and three-quarters percent to 4%, in the decision preceding the upcoming October meeting. In another price measure, the U.S. Bureau of Economic Analysis said the headline personal consumption expenditures price index rose 3.4% year-on-year in August. The annual increase in the core index, which excludes food and energy, was 3.0% in the same month. Core PCE inflation was thus below the headline rate in August, before annual consumer price inflation accelerated in September.

The Federal Reserve meets on October 27 and 28, according to the Federal Open Market Committee's official calendar. The meeting will be followed by the September personal income and outlays report, which the Bureau of Economic Analysis has scheduled for release on October 29 at 8:30 a.m. The September release therefore comes after the October meeting concludes and before the Fed's next meeting in December. On energy supplies, the U.S. Department of Energy aims to complete heating oil exchange transfers or deliveries by November 13, 2026. The department said this was the scheduled deadline for completing deliveries under the Northeast Home Heating Oil Reserve exchange. The Fed's next meeting is scheduled for December 8 and 9 and will be accompanied by the release of the Summary of Economic Projections, according to the central bank's calendar.