Gold Prices Mixed Ahead of US Inflation Data and Fed Rate Outlook

Gold prices ended Tuesday's trading session mixed as investors assessed a weaker U.S. dollar, declining Treasury yields, and fluctuating oil prices ahead of crucial U.S. inflation reports that could influence the Federal Reserve's next interest rate decision.

Spot gold fell 0.3% to $4,161.20 per ounce, while U.S. gold futures gained 0.2% to settle at $4,184.30 per ounce. Precious metal traders remained cautious as markets awaited fresh economic indicators that could reshape expectations for monetary policy.

The U.S. Consumer Price Index (CPI) report is scheduled for Wednesday, followed by the Producer Price Index (PPI) on Thursday. Both inflation readings are expected to provide important insights into price pressures and the likelihood of another Federal Reserve interest rate hike in October.

New York Federal Reserve President John Williams said Tuesday that he continues to anticipate one additional rate increase in 2026 but sees no need for further tightening in 2027. Williams pointed to underlying disinflationary trends despite persistent inflation risks associated with higher energy costs and growing artificial intelligence investments.

Meanwhile, U.S. Treasury yields continued declining as bond traders returned following the Columbus Day holiday. The benchmark 10-year Treasury yield dropped 3.9 basis points to 5.209%, providing some support for gold prices by reducing the opportunity cost of holding non-yielding assets.

Geopolitical developments also influenced precious metal markets as oil prices fluctuated amid conflicting supply expectations.

Russian Deputy Prime Minister Alexander Novak indicated that Moscow could increase diesel exports beyond volumes outlined in a recent agreement between U.S. President Donald Trump and Russian President Vladimir Putin.

The arrangement reportedly includes more than 300,000 tons of diesel initially, another 500,000 tons in November, and an additional 1 million tons afterward. Washington also temporarily eased sanctions on Russian fuel, although the agreement has attracted bipartisan criticism.

However, escalating tensions in Yemen raised concerns about potential energy supply disruptions. Iran-backed Houthi forces threatened additional attacks on Saudi airports and oil refineries following deadly strikes over the weekend.

Trump accused the Houthis of deliberately attempting to push oil prices higher ahead of November's U.S. midterm elections.

Investors will now focus on upcoming U.S. CPI and PPI figures, Federal Reserve policy expectations, and Middle East tensions for further direction in gold prices.