Gold prices moved higher on Tuesday as declining oil prices reduced some concerns about energy-related inflation, while investors continued to assess the outlook for U.S. interest rates.
At 04:52 ET, spot gold was up 0.3% at $4,151.89 an ounce, while gold futures gained 0.5% to $4,179.15 an ounce.
The moves came as Brent crude futures declined to $99.50 a barrel amid indications of recovering oil exports from the Gulf and a pledge by Group of Seven countries to release emergency energy reserves if required.
Lower energy prices could reduce one source of inflationary pressure, although their effect on future monetary policy will depend on broader economic and inflation data.
Gulf Oil Exports Recover During September
Gulf oil exports exceeded levels recorded before the start of the Iran war for 14 days during September, according to Kpler shipping data cited by Reuters.
The seven-day moving average for crude exports from the region stood at 18.3 million barrels per day on 30 September.
The data indicated that crude continued to leave the Gulf despite risks affecting tankers and other commercial vessels. According to the supplied material, Iran largely closed the Strait of Hormuz following the outbreak of the war, affecting a waterway that previously carried approximately one-fifth of global oil and liquefied natural gas flows.
The conflict has also affected other parts of the region, including Yemen and the Bab el-Mandeb Strait.
Alongside the recovery in export volumes, G7 countries have pledged to release emergency energy reserves to address potential supply disruptions.
U.S. Interest-Rate Outlook Remains in Focus
Investors are also assessing recent U.S. employment data, which came in below expectations, alongside lower oil prices when considering the outlook for Federal Reserve monetary policy.
According to the supplied material, the Federal Reserve is expected to leave interest rates unchanged at its October meeting before raising borrowing costs in December. These expectations represent the current market outlook rather than confirmed future policy decisions.
Minutes from the Fed’s September meeting, when policymakers raised interest rates for the first time in three years, are due this week and could provide further information about the central bank’s policy discussions.
Expectations for interest rates can affect gold because the metal does not generate interest income. U.S. Treasury yields also declined following a renewed sell-off in bonds on Monday, while the U.S. dollar index weakened slightly.
ANZ Notes Lower Expectations for October Rate Increase
ANZ analysts said gold had recovered from the decline recorded last week as investors reassessed fiscal pressures and the outlook for interest rates.
The analysts also pointed to reduced expectations for further rate increases following weaker U.S. employment data.
According to ANZ, markets were assigning approximately a 20% probability to an October interest-rate increase, compared with around 70% one week earlier.
These probabilities represent market expectations cited by ANZ and do not indicate a confirmed Federal Reserve decision.