Gold Price Slumps Ahead of Fed Rate Decision Amid Inflation Concerns

Gold prices are trading lower at around $4,280 per ounce as markets remain concerned about tightening policies ahead of the U.S. Federal Reserve's key interest rate decision. According to Bloomberg data as of 8:45 a.m. Singapore time on October 16, gold spot prices fell 0.2% from the previous close to $4,284.99 per ounce, following two consecutive days of declines and trading near $4,290.

Rising global oil prices have intensified inflation worries, pushing U.S. Treasury yields higher. The 10-year Treasury yield recently hit a 20-year high of 5.04% during yesterday's session, marking the highest level since 2007. Market expectations now price in a 92% probability of an interest rate hike by the Federal Reserve today.

Christopher Wong, OCBC strategist, noted that while markets have already priced in this week's potential rate increase, the key uncertainty lies in the Fed's subsequent policy path. If further tightening is signaled, gold prices could face increased downward pressure, with a break below the $4,250 support level potentially pushing prices toward $4,000.

Oil prices also remain a significant factor for gold pricing. With the resumption of Saudi Arabia's East-West pipeline operations still uncertain following recent attacks, Aramco has delayed oil supplies to some European customers. Gold had previously traded above $4,700 per ounce at the end of last month but has fallen over 3% since September as Fed policy expectations have been revised downward.

Silver prices remained steady at $63.68 per ounce while platinum declined 0.2% and palladium rose 0.1% during the same period.