Gold prices extended their decline during Asian trading on Friday, October 23, as rising oil prices intensified inflation concerns and increased expectations that US interest rates could remain elevated for longer.
The precious metal remained under selling pressure after reaching its lowest level in three months, with investors reassessing the outlook for Federal Reserve monetary policy.
Spot gold fell 0.3% to $4,013.40 per ounce by 02:35 ET (06:35 GMT), marking its weakest level since July 20. Meanwhile, US gold futures declined 0.8% to $4,028.10 per ounce.
Gold had already dropped 2.8% during Thursday’s session and was heading toward a weekly decline of approximately 3.5%.
Gold Prices Hit Three-Month Low as Selling Pressure Intensifies
The latest decline in gold prices reflected growing uncertainty about inflation, borrowing costs and the future direction of US monetary policy.
Although gold traditionally attracts investors during periods of economic instability, expectations of higher interest rates have reduced its appeal.
Unlike bonds and other interest-bearing assets, gold does not generate regular income. Consequently, elevated yields can increase the opportunity cost of holding the precious metal.
Recent US inflation reports have added to these concerns, with both consumer and producer price data exceeding economists’ expectations.
The stronger inflation readings have reinforced speculation that the Federal Reserve may need to maintain restrictive monetary conditions for an extended period.
Oil Prices Surge Above $114 Amid Middle East Tensions
A sharp rally in crude oil prices has emerged as a major factor behind the renewed pressure on precious metals.
Oil prices continued climbing during Friday’s Asian session following attacks attributed to Yemen’s Houthi group in Saudi Arabia.
The developments raised concerns about potential disruptions to energy supplies from one of the world’s most important oil-producing regions.
Brent crude futures climbed above $114 per barrel, reaching their highest level in approximately five months.
Sustained increases in energy costs could push consumer prices higher by raising transportation, manufacturing and production expenses.
For central banks, another wave of energy-driven inflation would complicate efforts to control prices while supporting economic growth.
This possibility has encouraged investors to reconsider expectations for future interest rate decisions, creating additional challenges for gold.
Federal Reserve Rate Expectations Weigh on Gold Market
Financial markets are closely monitoring the Federal Reserve’s upcoming policy meeting, scheduled for October 27–28.
Policymakers are widely expected to leave interest rates unchanged at the meeting. However, expectations of further monetary tightening later in the year have increased.
According to the CME FedWatch Tool figures cited in the report, traders assigned a 78% probability to a Federal Reserve interest rate increase in December.
The combination of stronger inflation data and rising oil prices has strengthened concerns that US monetary policy could remain restrictive.
Higher interest rates generally increase the attractiveness of yield-bearing investments relative to non-yielding assets such as gold.
As a result, even heightened geopolitical uncertainty has struggled to generate sufficient safe-haven demand to reverse the metal’s recent losses.
Gold Fails to Benefit From Falling Treasury Yields
Gold’s recent performance has been particularly notable because the metal failed to strengthen despite weakness in US equities and a substantial decline in Treasury yields.
Analysts at ING highlighted this unusual market reaction, noting that gold continued to fall even as the benchmark 10-year US Treasury yield dropped below 5%.
Under typical market conditions, declining bond yields can support gold by reducing the relative advantage of interest-bearing investments.
However, investors appeared more focused on the inflationary consequences of rising crude oil prices and their potential influence on central bank policy.
With US inflation remaining above the Federal Reserve’s 2% target, another increase in energy costs could reinforce expectations of tighter monetary conditions.
The divergence between falling Treasury yields and weaker gold prices suggests that inflation expectations and policy uncertainty have become especially important drivers of precious metals trading.
Silver Prices Slide to Lowest Level Since November 2025
The broader precious metals market also experienced significant selling pressure.
Silver prices fell toward $54.175 per ounce, reaching their lowest level since November 2025.
The metal had suffered a decline of nearly 6% during Thursday’s session, highlighting the severity of the recent selloff.
Silver’s weakness reflected the broader retreat across precious metals, although its industrial applications also make it sensitive to expectations for manufacturing activity and economic growth.
Meanwhile, platinum showed modest signs of stabilization.
Platinum prices increased 0.3% to $1,572.10 per ounce after falling nearly 3% during the previous session.
Copper Prices Recover After Previous Session’s Losses
Industrial metals displayed a somewhat stronger performance on Friday, with copper recovering part of its recent losses.
Benchmark copper futures on the London Metal Exchange advanced 1% to $14,234.33 per metric ton.
Meanwhile, US copper futures gained 0.9% to $6.46 per pound.
Both contracts had declined more than 2% on Thursday amid broader weakness across commodity markets.
The partial recovery suggested that some investors were returning to industrial metals following the previous session’s sharp declines.
Nevertheless, uncertainty surrounding global economic conditions, energy prices and interest rates continued to influence commodity market sentiment.
Gold Price Outlook Hinges on Inflation and Fed Policy
The near-term outlook for gold remains closely tied to developments in crude oil markets, US inflation data and Federal Reserve interest rate expectations.
Although geopolitical tensions would ordinarily support demand for safe-haven assets, the inflationary consequences of higher energy prices have complicated the picture.
Investors are now weighing the potential benefits of holding gold during periods of uncertainty against the possibility that borrowing costs could remain elevated.
The upcoming Federal Reserve meeting may provide further insight into how policymakers intend to respond to persistent inflation pressures.
For now, gold prices remain near three-month lows and are heading toward a substantial weekly decline, reflecting the market’s growing sensitivity to inflation risks and monetary policy expectations.
