Gold Falls as Fed Rate Outlook and Rising Oil Prices Weigh on Bullion

STUPA NEWS ■ JAKARTA — Gold prices edged lower on Monday as expectations that the U.S. Federal Reserve will keep interest rates higher for longer, coupled with a sharp rise in oil prices, fueled inflation concerns and reduced demand for the non-yielding metal.

Spot gold fell 0.3% to US$4,030.34 per troy ounce at the close of trading, while U.S. gold futures for August delivery settled 0.4% lower at US$4,090.50 per ounce.

Gold has traded within a range of US$4,000 to US$4,200 per ounce for more than a month as investors awaited fresh signals on the outlook for U.S. monetary policy.

Other precious metals also came under pressure. Platinum declined 1.6% to US$1,615.25 per ounce, while palladium dropped 1.7% to US$1,252.62. Spot silver was little changed at US$57.63 per ounce.

Market sentiment was weighed down by a more than 20% surge in Brent crude prices, which renewed concerns that inflation could remain elevated and reinforced expectations of a hawkish stance from Federal Reserve officials.

Higher interest rates typically reduce the appeal of gold because the metal offers no yield. Investors are also watching upcoming U.S. employment data for clues on the Fed's next policy moves, while continuing to monitor geopolitical tensions in the Middle East.

Meanwhile, the Bank of Korea has purchased gold from domestic producers as part of its strategy to diversify the country's foreign exchange reserves, underscoring continued interest by central banks in expanding their gold holdings.(Dea)