Gold prices edged lower on October 28, following a gain of roughly 1% in the previous trading session.
Rising oil prices have fueled inflation concerns, while investors await the Federal Reserve's policy decision later in the day for clues on the interest rate outlook.
"Gold prices are fluctuating based on rate expectations and inflation risks stemming from higher energy prices," said Soni Kumari, an analyst at ANZ Bank, adding that the Fed will likely remain cautious, which continues to be a key short-term headwind for gold.
As oil prices climb, elevated energy costs reinforce market expectations that the Fed will keep interest rates higher for longer, thereby increasing the opportunity cost of holding non-yielding gold.
Markets are awaiting the Fed's upcoming policy decision as well as PCE data due on Thursday. The PCE index is a key indicator the Fed closely monitors in pursuit of its 2% inflation target.
According to the CME FedWatch tool, traders widely expect the Fed to hold rates steady today, while pricing in an approximately 84% probability of a rate hike in December.
Hundreds of economists surveyed by Reuters believe that high inflation in the global economy will persist into next year.
Meanwhile, a Reuters poll shows that analysts have downgraded their 2026 gold price forecasts for a second consecutive quarter due to elevated U.S. Treasury yields, a stronger dollar, and expectations that interest rates will remain high for longer, though they still expect gold prices to recover in 2027.
In addition, the Reuters survey showed that analysts and traders have cut their 2026 platinum and palladium price forecasts for a third straight quarter.
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