Gold slips toward $4,115 as Saudi unrest fuels inflation worries
Investors saw the precious metal dip just below the $4,115 mark after the U.S. State Department ordered non‑emergency staff out of Saudi Arabia. The move heightened fears that the conflict could choke energy supplies, reviving inflation concerns while the Federal Reserve’s October meeting looms.
Gold had briefly bounced 0.4% the day before, snapping a three‑day slide, but the fresh geopolitical flare‑up pulled it back toward the $4,100 level.
What’s driving the pullback?
• A drone strike on a Saudi Aramco oil field killed two workers, underscoring the risk to global oil output.
• U.S. Treasury yields rose across the curve, with the two‑year hitting a one‑week high, adding pressure on non‑yield‑bearing assets like gold.
• Recent U.S. housing data showed a slump in starts and a record‑low pending‑sale index, hinting at a softening economy.
Fed expectations
Fed Chair Kevin Warsh gave no fresh clues on Friday, leaving markets convinced the central bank will keep rates steady on Oct. 27‑28. The odds of a 25‑basis‑point hike sit below 17%. Still, inflation is running well above the Fed’s 2% goal, and higher energy prices could force another hike in December, which would keep gold under pressure.
Key Takeaways
- Gold hovers just above $4,100 as Middle‑East tensions revive inflation fears.
- U.S. Treasury yields climbing, especially the two‑year note, weigh on bullion.
- Fed likely to pause rates in October, but a December hike remains on the table.
- Energy‑related inflation risk persists, keeping gold’s safe‑haven appeal alive.