Gold prices rose on Tuesday as lower crude prices reduced some concerns about energy-driven inflation and investors assessed the potential implications for U.S. monetary policy.
At 04:52 ET, spot gold gained 0.3% to $4,151.89 an ounce, while gold futures increased 0.5% to $4,179.15 an ounce.
Brent crude futures were trading at $99.50 a barrel after indications that Gulf oil exports had recovered during parts of September. G7 countries have also pledged to use emergency energy reserves in response to potential supply disruptions.
Lower oil prices could reduce some inflationary pressure, although the implications for Federal Reserve policy will depend on broader inflation, employment and economic data.
Gulf Oil Shipments Exceed Pre-War Levels on 14 Days
Gulf crude exports exceeded levels recorded before the Iran war on 14 days during September, according to Kpler shipping data cited by Reuters.
The seven-day moving average for regional crude exports reached 18.3 million barrels per day on 30 September.
The figures showed continued oil flows from the region despite risks affecting tankers and other commercial vessels. According to the supplied material, Iran largely closed the Strait of Hormuz after the outbreak of the war, affecting a route that previously handled approximately one-fifth of global oil and liquefied natural gas flows.
The conflict has also affected other regional shipping routes, including the Bab el-Mandeb Strait near Yemen.
The recovery in oil exports, together with the G7 pledge regarding emergency reserves, coincided with the decline in Brent crude prices.
Fed Expectations Shift Following Employment Data
Recent U.S. employment figures came in below expectations, adding another factor for investors assessing the Federal Reserve’s interest-rate outlook.
According to the supplied material, current expectations indicate that the Fed will leave rates unchanged in October before increasing borrowing costs in December. This represents a market expectation rather than a confirmed policy decision.
Investors are also awaiting minutes from the Federal Reserve’s September meeting, when policymakers raised interest rates for the first time in three years.
Changes in interest-rate expectations can affect demand for gold because the metal does not generate interest income. U.S. Treasury yields declined after renewed selling in the bond market on Monday, while the U.S. dollar index also moved slightly lower.
ANZ Cites Decline in October Rate-Hike Expectations
ANZ analysts said gold had recovered from last week’s decline as investors reassessed global fiscal pressures and expectations for monetary policy.
The analysts also cited weaker U.S. employment data as a factor behind lower expectations for an October rate increase.
According to ANZ, markets were pricing an approximately 20% probability of an October rate increase, compared with around 70% one week earlier.
The figures reflect market expectations cited by ANZ and do not represent a confirmed decision by the Federal Reserve.
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