Mounting geopolitical tensions across the Middle East have driven crude oil prices higher, reigniting global inflation fears and placing fresh pressure on precious metals markets. Concerns that the U.S. Federal Reserve (Fed) will maintain a hawkish monetary stance and elevated interest rates for an extended period have triggered a downturn in international gold bullion prices.
According to a report by Reuters, spot gold dropped 0.5% to $4,120.49 per ounce on Tuesday (October 20).
Energy Market Surge: Crude oil prices—particularly Brent crude—surged to five-month highs following reports of Houthi drone strikes on Saudi Arabian energy infrastructure and attacks on commercial vessels in the Persian Gulf.
U.S. Gold Futures & Monetary Outlook: U.S. gold futures for December delivery fell 0.5% to $4,139.10 per ounce. Ricardo Evangelista, Chief Executive Officer at ActivTrades, noted that persistent inflationary pressure driven by high fuel prices could compel the Federal Reserve to keep interest rates higher for longer.
CME FedWatch Tool & Bank of Japan: According to the CME FedWatch Tool, while interest rates are expected to remain unchanged at the upcoming October 27–28 FOMC meeting, traders are pricing in a 90% probability of a rate hike in December. Concurrently, Bank of Japan Governor Kazuo Ueda signaled possible interest rate increases as inflation nears the central bank’s 2% target.
Performance of Other Precious Metals: Spot silver gained 0.2% to $57.19 per ounce. Conversely, spot platinum declined 0.1% to $1,639.45 per ounce, while palladium slipped 0.9% to $1,110.06 per ounce.
