Gold slips below $4,000 as oil price surge fuels Fed rate-hike expectations

Gold prices slipped to just under $4,000 in early Asian trading on Monday, pressured by higher oil prices that have revived expectations of further Federal Reserve tightening. The metal is near its lowest level since July as elevated energy costs stoke inflation worries ahead of the Fed's upcoming policy meeting.

WTI crude oil rose to a more than five-month high after Houthi attacks in Saudi Arabia raised concerns about supply disruptions. U.S. President Donald Trump said over the weekend that the United States is "getting to be decision time" on whether to pursue a deal with Tehran or resume attacks, reflecting growing tensions in the region.

"Gold is being weighed down by concerns around oil prices, rates and the Fed outlook," said Ryan McKay, senior commodity strategist at TD Securities. "At the margin, flows have also been negative, with heavy CTA selling this week adding to the pressure."

Traders see a modest chance of a quarter-point rate hike at the Fed's meeting next week, while higher oil prices have spurred bets on another increase in December. The CME FedWatch tool shows a 79.4% probability of a December hike and a 90.6% chance that rates will stay unchanged at the upcoming meeting.

Strategists at OCBC noted that gold fell more than 2.5% overnight amid a broader market sell-off, with Brent crude’s rise adding to inflation concerns and expectations of prolonged restrictive policy. They observed that gold weakened even as U.S. Treasury yields fell sharply, suggesting fragile near-term sentiment.

Technical analysis indicates a bearish short-term outlook, with spot gold trading below the 100-day simple moving average and the 20-day Bollinger middle band. Resistance levels are identified around $4,015, $4,130, $4,220 and $4,240, which would need to be breached for a sustained recovery.