Spot gold fell 0.3% to $4,126.84 per ounce by 0102 GMT, trailing a December‑delivery futures drop of 0.3% to $4,146.00.
The dip follows the U.S. Federal Reserve’s September 25‑basis‑point rate hike to 3.75‑4.00%, tightening the monetary backdrop.
CME’s FedWatch Tool shows traders pricing an 83% probability that the Fed will keep rates unchanged on its October 27‑28 meeting, while 94% of market participants expect a 25‑basis‑point increase in December.
BoJ Governor Kazuo Ueda said India‑aligned inflation is "quite close" to the 2% target, citing AI‑driven demand and a tight labor market as possible catalysts for further tightening.
Higher rates raise the opportunity cost of gold, which offers no yield, a factor that continues to weigh on bullion prices.
Geopolitical tensions add a layer of risk: Yemen’s Houthis claimed attacks on Saudi energy and military targets, a factor that could lift risk premium premiums.
Looking ahead, traders will focus on next week’s U.S. PCE data, released on Tuesday, as a key gauge for the Fed’s policy path. Market participants are also watching December futures for hints of a rate hike.