Gold prices near two-month low

Gold prices rose slightly on Tuesday (September 29), but the precious metal is still near its lowest price in more than seven weeks. Fears that the US Federal Reserve will keep interest rates high for a while longer continue to weigh on gold prices. Reuters reports.

Spot gold prices rose 0.4 percent to $4,130.58 an ounce at 4:07 p.m. GMT on Tuesday, Reuters reported. Earlier on Monday, gold prices fell to their lowest level since August 5. Meanwhile, the price of gold futures contracts for future delivery in the United States fell 0.2 percent to $4,162.20 an ounce.

Market analyst Christopher Tahir said that the geopolitical situation has a significant impact on the price of gold. If tensions increase in the Middle East, oil prices and interest rates may increase further. This will further increase the pressure on gold. However, if the tension in the situation decreases, the pressure on gold may also decrease somewhat.

Meanwhile, US and Iranian officials have held separate talks with mediators as part of a new effort to end the seven-month-old war, officials from both countries said.

Oil prices rose for the second consecutive day on concerns about oil supplies from the Middle East. Rising oil prices increase the cost of producing and supplying goods and services. This can lead to inflationary pressures. In such a situation, central banks may move to raise interest rates.

As interest rates rise, the attractiveness of investing in gold decreases. Because gold does not earn any interest, interest-based assets may become relatively more attractive to investors in a high-interest environment.

According to CME's FedWatch tool, the probability that the Fed will raise interest rates at its October meeting is now 72.5 percent, up from 57.6 percent a week ago.      

Fed Governor Lisa Cook said inflationary pressures could persist in the coming months, led by rising demand for artificial intelligence and higher oil prices. She did not comment on whether further rate hikes would be necessary.

Investors are keeping an eye on economic data this week, with data on consumer confidence, job openings, private sector employment, personal consumption spending and nonfarm payrolls due.

According to market analyst Tahir, if inflation remains high and the economy is strong, the Federal Reserve may keep interest rates high for a while longer. In such a situation, there is a risk of further decline in gold prices.

Meanwhile, among other precious metals, silver prices fell 0.9 percent to $60.42 per ounce. Platinum prices fell 1.3 percent to $1,697.71 and palladium prices fell 0.8 percent to $1,205.27 per ounce.