Gold Sinks Below USD4,100, Silver Tumbles 3.6 Percent as Oil Jumps

(MENAFN) Precious metals sold off sharply on Thursday, with gold dropping under the $4,100 mark and silver shedding more than 3.5%, as an oil rally stoked fears of stubborn inflation and higher-for-longer borrowing costs.

By 0800GMT, spot gold was changing hands at $4,088.95 an ounce, a loss of $52.15, or 1.26%. Silver fell harder, giving up $2.07, or 3.57%, to $55.89 an ounce.

The slide erased the prior session’s gains. Fresh Middle East tensions sent crude higher after a drone attack on Saudi Aramco’s Shaybah oil field left two people dead. Washington also directed some personnel and their family members to depart its diplomatic missions in Saudi Arabia.

The jump in energy costs sharpened worries that inflation will prove persistent, undercutting hopes for monetary easing.

The US Federal Reserve is broadly expected to hold rates steady at next week’s meeting. Remarks last Friday from Chair Kevin Warsh did little to alter that outlook, according to market commentary. Traders are still pricing in the possibility of a rate hike in December, with energy-driven price pressures showing no sign of easing.

Gold is conventionally seen as a safeguard against inflation. But higher rates weaken its appeal by raising the opportunity cost of holding an asset that pays no interest.

The European Central Bank and the Bank of Japan are also expected to leave rates unchanged next week.

Thursday’s losses leave gold down 4.62% over the past month, while silver has shed 13.11% over the same period.

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