Gold futures turn higher as crude oil prices pull back

What happened

Gold futures rose Monday, helped by softer oil prices after last week's steep losses took prices to three-month lows. Front-month Comex gold for October delivery added 0.8% to $4,022.30/oz ahead of the Federal Reserve's Wednesday rate decision.

Confirmed

Global impact / market context

Lower oil prices ease inflation worries, which reduces pressure on gold, an asset that pays no interest and competes with yields. A Fed pause widely expected for Wednesday also supports gold, while an 80% chance of a December rate hike, per CME's FedWatch Tool, could limit further gains.

Analyst inference

Gold had fallen to three-month lows on last week's steep losses. Traders now weigh the expected Wednesday Fed pause against an 80% December hike probability. Softer crude and bargain-hunting buying are lifting the metal, with one strategist expecting it near $4K/oz until the Fed update.

Analyst inference

What to watch

1. The Fed's next interest rate decision is due Wednesday. A pause is widely expected after the September rate hike, while CME's FedWatch Tool puts December rate hike expectations at 80%. Confirmed
2. Investors will examine U.S. Personal Consumption Expenditures data later this week. That is the Fed's preferred inflation gauge, and it offers fresh clues on the interest rate outlook. Confirmed
3. Watch crude oil prices, since a further pullback could keep easing inflation worries and support gold, while renewed gains in oil could reverse that help ahead of the Fed decision. Analyst inference

Evidence

• seekingalpha.com