Gold slipped back below $4,300 an ounce on Tuesday as a firmer dollar and rising Treasury yields reinforced pressure on the metal ahead of this week's Federal Reserve policy decision. A pipeline disruption in Saudi Arabia pushed oil and inflation expectations higher, lifting bets on a Fed rate hike, while OCBC still forecasts gold at $4,600 by December 2026.
Oil disruption lifts Fed hike bets
Gold fell 0.2% to $4,290.39 an ounce at 02:16 ET, while Gold Futures declined 0.5% to $4,330.57. The move follows a drop of more than 1% in the previous session that took bullion to a five-week low. Silver slipped 0.2% to $63.12 an ounce, platinum rose 0.2% to $1,769.49, and the U.S. Dollar Index rose 0.2% to 99.63.
Markets are now pricing about a 92% probability of a Fed rate increase this week, as higher energy costs raise the risk that inflation stays elevated. Higher borrowing costs tend to weigh on gold because the metal does not pay interest, making yield-generating assets more attractive when rates rise.
Oil prices climbed after Saudi Arabia shut its East-West pipeline following attacks last week, a disruption that puts millions of barrels a day at risk because the pipeline had been carrying crude around the turmoil in the Strait of Hormuz. Saudi Arabia has not said how long the shutdown will last or how quickly it can raise shipments through the strait to offset the lost flows.
The inflation risk has also pushed Treasury yields higher. The 10-year U.S. Treasury yield briefly touched 5% on Monday for the first time in almost three years, reflecting concerns over inflation as well as rising government and corporate borrowing needs. Gold is now down more than 3% in September after trading above $4,600 an ounce in late August, as traders repeatedly recalibrate Fed policy expectations.
Longer-term demand keeps the outlook supported
Despite the near-term pressure, investors continue to expect bullion to recover over time as it regains its role as a portfolio hedge. OCBC has raised its precious-metals forecasts, pointing to a stronger starting point for prices and still-supportive structural demand.
Chez Anbu, head of wealth advisory at OCBC, said gold's strong rebound in August reversed the softer tone seen earlier as the macroeconomic backdrop became more supportive. OCBC now forecasts gold at $4,600 an ounce by December 2026, with its silver target at $69.70 an ounce. Gold remains well above the floor near $4,000 an ounce set during the earlier correction.
Source: Commodities & Futures News
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