Gold slips near $4,160 as Middle East tensions fuel rate-hike concerns Roushni Nair Mon, October 12, 2026 at 9:50 PM EDT 3 min read GC=F +0.11% PA=F -0.59% SI=F -0.26% PL=F 0.00% CL=F -1.17% Investing.com -- Gold prices extended losses on Tuesday as escalating conflict in the Middle East raised concerns over further energy supply disruptions, keeping inflation risks elevated and strengthening the case for tighter monetary policy.
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At 21:12 ET (01:12 GMT), XAU/USD fell 0.2% to $4,163.00 an ounce, while Gold Futures declined 0.1% to $4,186.45. XAG/USD slipped 0.4% to $60.0730 an ounce, while XPT/USD fell 0.2% to $1,689.47. XPD/USD lost 0.3% to $1,139.36. The U.S. Dollar Index fell marginally by 0.1% to 102.54.
Gold traded near $4,160 an ounce after ending the previous session 0.5% lower. Brent crude approached $106 a barrel as attacks by Iran-backed Houthi forces on Saudi Arabia's main airport increased pressure on Washington to provide further support to its regional ally.
The spreading conflict has raised concerns that further disruptions to energy supplies could push oil prices higher and prolong inflationary pressures. Gold has fallen around a fifth since the U.S.-Iran war erupted in late February, as the conflict fuelled global inflation concerns and contributed to tighter monetary policy.
Higher borrowing costs typically weigh on gold because the non-yielding metal becomes less attractive relative to interest-bearing assets. Persistent inflation and heavy government borrowing have also kept interest rates and bond yields elevated, further limiting bullion's appeal.
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Earlier in the Asian session, spot gold was down at $4,156.27 an ounce. Silver fell 0.5% to $59.93 an ounce, while platinum and palladium also declined.
Traders are looking to U.S. inflation data due on Wednesday for clues on the Federal Reserve's next policy move, following its decision to tighten policy last month.
Interest-rate swaps imply roughly a 20% probability of another increase at the Fed's October meeting, while markets are pricing in one additional rate hike before the end of the year.
Federal Reserve Bank of Cleveland President Beth Hammack said on Monday that smaller, more frequent adjustments to monetary policy could help keep inflation expectations anchored. However, she stopped short of endorsing an interest-rate increase in October.
Her remarks come as policymakers contend with persistent inflation risks and elevated borrowing costs. Further increases in energy prices could complicate the inflation outlook and reinforce expectations that interest rates may need to remain higher or rise further.
Wednesday's U.S. consumer price index report is therefore likely to be a key catalyst for precious metals. Stronger-than-expected inflation could strengthen the case for additional monetary tightening and weigh on non-interest-bearing gold, while softer data could ease some concerns about further rate hikes.
For now, investors are assessing the impact of Middle East tensions on oil prices and inflation alongside the Federal Reserve's policy outlook, with both developments likely to influence demand for bullion.
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