Gold Prices: Bullion Falls 1.1% as Oil Rebound Fuels Inflation Concerns

Gold prices fell on Friday as a rebound in oil prices heightened inflation concerns and strengthened expectations that interest rates could remain elevated for longer. Investors also awaited the release of key US employment data for further clues about the Federal Reserve’s monetary policy.

Spot gold declined 1.1% to $4,044.09 per ounce by 0501 GMT, although it remained on track for its strongest weekly performance since late August. US gold futures for December delivery fell 1.5% to $4,053.30 per ounce.

Ilya Spivak, head of global macro at Tastylive, said the recent rebound in crude oil prices was adding to inflationary pressures weighing on gold.

Oil prices rose more than 1% on Friday despite remaining on course for a sharp weekly decline. Expectations of reduced tensions in the Iran conflict following the US election results weighed on the market, while persistent concerns over Middle Eastern supply disruptions continued to support prices.

Higher energy costs can reinforce expectations that the Federal Reserve will maintain elevated interest rates for longer. This tends to put pressure on gold, which does not generate interest income.

Meanwhile, global financial markets faced renewed volatility as technology-heavy Asian markets suffered steep losses. Concerns over increased regulatory scrutiny and a slowdown in artificial intelligence investment triggered the sharpest decline in US stocks since the tariff-driven market sell-off in April 2025.

Tim Waterer, chief market analyst at KCM Trade, said investors were selling gold holdings to raise cash and meet margin requirements amid broader market uncertainty. He noted that such conditions could temporarily weaken gold’s traditional safe-haven appeal.

Investors were awaiting the US non-farm payrolls report, scheduled for release at 1330 GMT, for further indications of the strength of the labour market and the Federal Reserve’s likely policy direction.

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According to CME’s FedWatch tool, traders saw a 68% probability of a Federal Reserve rate increase in December, down from the near certainty anticipated last month. Two Fed officials on Thursday also supported a gradual and measured approach to interest rate increases to address inflation remaining above the central bank’s target.

Separately, Goldman Sachs lowered its end-2026 gold price forecast to $4,150 per ounce from its previous estimate of $4,650, citing the Federal Reserve’s more hawkish stance.

Other precious metals also recorded losses on Friday. Spot silver declined 0.5% to $51.51 per ounce, platinum slipped 0.3% to $1,512.83, and palladium fell 1.1% to $1,020.10. Despite the declines, all three metals remained on track to post weekly gains.