Gold Falls 0.16% to $4,054.60 as Oil Rises After Claim of Ras Tanura Targeting

Key Facts

Spot gold fell $6.36, or 0.16%, to about $4,054.60 an ounce in early U.S. trading on Wednesday, October 28, as oil rose on supply concerns after the Houthis claimed to have targeted the Ras Tanura refinery. At 0140 GMT, Brent crude rose $1.48, or 1.3%, to $115.36 a barrel, while West Texas Intermediate gained $1.22, or 1.22%, to $101.12. This was an early-trading snapshot; EL7 data showed gold closing at $4,051.6, Brent at $115.32 and U.S. crude at $102.78 on October 28. Oil recouped part of a decline of nearly $2 in Tuesday’s session after Middle East talks eased supply concerns. By contrast, inflation concerns and the U.S. interest-rate outlook limited the appeal of non-yielding gold.

The Houthis said on Tuesday they had hit the Ras Tanura refinery with a ballistic missile, but the Associated Press said it could not verify the claim and Saudi Arabia had issued no comment on the refinery. Saudi authorities said air defenses intercepted and destroyed three ballistic missiles launched toward the Eastern Province, according to the news agency. The interception of the missiles does not establish that the refinery was hit. Ras Tanura has refining capacity of 550,000 barrels per day and was shut for a period in the early months of the Iran war as a precaution, Reuters reported. The claim revived supply concerns in the oil market, while reports of a strike on the facility remained unconfirmed.

In the same early U.S. trading, spot silver fell $0.195, or 0.40%, to $54.202 an ounce, according to Kitco. By 1249 GMT, spot gold was down 0.2% at $4,050.55 an ounce, while U.S. gold futures for December delivery fell 0.2% to $4,064.60, Reuters reported via Kitco. Hamad Hussein, an analyst at Capital Economics, said rising oil prices and the risk that the Federal Reserve could take a more hawkish stance than investors expect "appear to be weighing on gold prices." Higher energy prices reinforce expectations that interest rates will stay elevated for longer, raising the opportunity cost of holding the non-yielding metal. The move came in a market where energy prices, inflation and the monetary-policy outlook remained intertwined factors in gold’s short-term moves, according to the World Gold Council.

After the first version of the story was published, the Federal Reserve kept its target rate range at 3.75% to 4%, in a 10-to-2 vote. Lisa Cook and Beth Hammack voted for a quarter-percentage-point rate increase, against the majority’s decision. The committee’s statement said inflation "remains elevated" and that the accumulation of more information would help it determine the appropriate monetary-policy stance to return inflation to its 2% target. The split vote adds to market focus on the rate outlook, as a Capital Economics analyst linked higher oil prices and the possibility of a more hawkish Fed stance to pressure on gold. In a broader comparison, gold ended September at $4,176 an ounce, down 8.5% on the month, despite global gold-backed exchange-traded funds recording inflows of $10 billion, or 67 tonnes, according to the World Gold Council.

The World Gold Council attributed part of gold’s September decline to a 53-basis-point rise in the 10-year U.S. Treasury yield to 5.3% and a 2% gain in the dollar index. In the same month, China’s central bank added 23 tonnes to its gold holdings, its largest monthly increase since October 2023, taking official holdings to 2,410 tonnes. Chinese gold funds also recorded net inflows of 27 billion yuan in the third quarter and increased their holdings by 27 tonnes during the period. China’s central bank bought 63 tonnes in the quarter, its strongest quarterly total since the third quarter of 2023, the council said. The council said the international price remained above $4,100 an ounce in early October, with geopolitical tensions, energy, inflation and U.S. rate expectations among the factors driving it.

Attention will next turn to the U.S. personal income and spending report for September, including the personal consumption expenditures price index, scheduled for release on October 29 at 8:30 a.m. Eastern time. Ahead of the U.S. inventory data, a Reuters poll of eight analysts showed expectations for an increase of about 15,000 barrels in the week ended October 23; this was an estimate before the reading was released, not an actual inventory figure. On supply, three people familiar with the matter expected OPEC+ to leave December production targets unchanged on Sunday. In China, withdrawals from the Shanghai Gold Exchange totaled 234 tonnes in the third quarter, down 21% from a year earlier and 44% below the 10-year average of 418 tonnes. The World Gold Council is due to release its next Gold Demand Trends report in early November.