Gold Falls 4% in a Week as Brent Surges to Highest Since June 2022
Key Facts
Spot gold fell 4% through Friday, October 23, heading for its steepest weekly loss since June as inflation concerns resurfaced amid rising oil prices, Reuters reported. The metal fell to a 3-month low, nearing $4,000 an ounce, with pressure building ahead of the Federal Reserve meeting scheduled for October 27 and 28. At 11:20 a.m. Eastern time, spot gold was down 0.6% at $4,000.59 an ounce, Reuters said. The price had earlier fallen below $4,000 for the first time since mid-July, before touching $3,975.23 during the session. The decline puts gold within a broader wave of market concern over the path of inflation and interest rates.
Rising oil prices were central to the shift that weighed on gold: Brent crude rose 3.1% on October 23 to close at $116.72 a barrel, its highest level since June 2022, the Associated Press reported. Crude was below $97 a barrel at the start of October, underscoring how quickly it climbed during the month. The move revived concerns that higher energy costs could keep price pressures elevated as investors await signals on U.S. monetary policy. Reuters reported that gold was on track for its biggest weekly decline in more than 4 months, partly weighed down by inflation concerns stoked by rising oil prices. World Gold Council data also showed that the price fell 8.5% in September to $4,176 an ounce, pressured by higher U.S. Treasury yields, a stronger dollar and a pullback in futures positions.
U.S. price data showed notable increases continuing ahead of the Fed meeting. The Consumer Price Index rose 0.6% in September, following a 0.4% increase in August, while the annual increase was 3.7% in the 12 months through September, according to the Bureau of Labor Statistics. The Producer Price Index for final demand also rose 6.3% year over year in September, its biggest annual increase since December 2022. The readings come as energy pressures intersect with the price trajectory, while investors watch whether they will affect the central bank's assessment of inflation. Also in September, global gold ETF inflows exceeded 70 tonnes despite the metal's dollar price falling by more than 8%, according to the World Gold Council, showing that the price decline coincided with continued inflows into the funds.
Caution spread to U.S. stocks in Friday's session, with the S&P 500 losing about 0.5% and recording its second consecutive weekly loss, the Associated Press reported. Nearly 3 of every 4 stocks in the index fell, with the agency noting that higher oil prices weighed on the market. This reflects the broadening impact of energy and inflation concerns beyond the metals market, as gold and oil moved in opposite directions. EL7 data showed the GCUSD instrument closing at 4,007.9 on October 23, compared with 4,160.1 on October 19; the XAUUSD instrument closed at 3,995.81, compared with 4,140.81 on the same dates. These daily closes vary by instrument from the spot gold price cited in market reports, so they do not by themselves represent a single weekly settlement price.
After the Fed meeting, markets will turn their attention to the Personal Consumption Expenditures price index, an inflation measure watched by U.S. markets. Personal income and outlays data for September, which include the index, are scheduled for release on October 29 at 8:30 a.m. U.S. local time, according to the Bureau of Economic Analysis. The index's annual reading was 3.4% in August. The release follows the Federal Open Market Committee meeting on October 27 and 28, making the next inflation data a near-term milestone in assessing the price trajectory. Investors are watching these dates after a week that saw gold fall, oil rise and U.S. stocks post another loss.