Gold prices fell more than 1% on Thursday as rising oil prices fuelled inflation concerns and strengthened expectations that interest rates could remain elevated for longer.
Spot gold dropped 1.1% to $4,095.75 per ounce by 0721 GMT, after touching its lowest level since October 7. US gold futures for December delivery declined 0.9% to $4,112.10.
Kelvin Wong, senior market analyst at OANDA, said rising oil prices could push inflation expectations higher, increasing the likelihood of elevated interest rates and putting further pressure on gold.
Despite persistent inflation, Federal Reserve policymakers are expected to remain cautious ahead of next week's policy meeting on October 27-28. Traders see a 15% chance of a rate increase in October, while markets are pricing in an 87% probability of a hike in December, according to CME's FedWatch Tool.
Investors are also awaiting US Personal Consumption Expenditures (PCE) data, due on October 29, for further indications of the central bank's policy direction.
Higher interest rates tend to weigh on gold, which does not offer interest income, by increasing the opportunity cost of holding the precious metal.
Among other precious metals, spot silver fell 3.3% to $56.06 per ounce, platinum declined 2.1% to $1,594.96, and palladium
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