Gold climbed back above $4,000 on Monday, as softer oil prices eased some inflation concerns ahead of this week’s Federal Reserve policy meeting that could shed light on the future interest rate path.
Spot gold rose 0.5% to $4,014.49 per ounce by 0924 GMT after hitting $3,975 on Friday, its lowest level since July 20.
US gold futures for December delivery rose 0.5% to $4,028.40 per ounce.
“This 4,000 level is seen by some as a buying opportunity. So we should eventually see slightly stronger purchases stepping in, because it has also, from a technical perspective, helped very well in the past,” said Giovanni Staunovo, a UBS analyst.
Gold is also finding support from lower oil prices today, Staunovo added, but upside remains limited by concerns that the Fed could continue hiking interest rates in December and again next year, even if it holds rates steady at this week’s meeting.
Traders are pricing in a 9% chance of an interest-rate hike on Wednesday, while expectations for a hike in December are at 80%, according to the CME’s FedWatch Tool.
Higher rates increase the opportunity cost of holding non-yielding gold.
