Oil prices rebound and rate hike expectations rise, gold price falls by over 1%

1. On Friday, gold prices fell by more than 1%, with spot gold dropping to around $4,035 per ounce at its lowest. The rebound in oil prices has heightened concerns about inflation, strengthening expectations that interest rates will remain at high levels for a longer period; investors are also awaiting the release of the US non-farm payrolls data later in the day. However, so far this week, gold prices have still risen more than 4% and are set to record their best performance since late August.2. Analysts stated that crude oil prices have mostly rebounded over the past day, which remains one of the factors pushing inflation expectations higher and suppressing gold prices. Oil prices rebounded by more than 3% on Thursday and continued to rise nearly 1% on Friday, but the weekly performance may still show a sharp decline, as markets expect the Iran conflict to deescalate after the US midterm elections; however, ongoing concerns about Middle East supply continue to support oil prices.3. Rising energy costs may reinforce market expectations that the Federal Reserve will keep interest rates high for a longer time, putting pressure on the non-interest-bearing asset gold. On Friday, Asian technology stocks fell sharply amid market concerns over increased regulatory scrutiny and a slowdown in AI development, triggering the biggest single-day drop in US stocks since the “Liberation Day” tariff turmoil in April 2025.4. Analysts said that, with risk-off sentiment prevailing, investors are liquidating gold positions to free up cash and meet margin calls in other markets; this dynamic has temporarily outweighed gold’s usual safe-haven appeal.5. The US non-farm payrolls report will be released at 21:30 Beijing time. The CME FedWatch tool shows that traders currently see a 68% probability of a Federal Reserve rate hike in December, while market expectations last month were close to 100%. On Thursday, two Federal Reserve officials advocated for moderate and steady rate hikes to address inflation that remains above target. In addition, Goldman Sachs lowered its year-end 2026 gold price forecast from $4,650 per ounce to $4,150 per ounce on Thursday, citing a more hawkish Federal Reserve stance.