Gold Slides Below $4,100 as Middle East Escalation Lifts Oil and Fed Hold Expected

Gold fell to a one-week low below $4,100 per troy ounce on Thursday, sliding to around $4,095 during Asian trading, as a combination of geopolitical risk and Federal Reserve rate expectations weighed on the metal. The drop came despite a softer dollar, which typically supports gold, indicating that inflation fears tied to rising oil prices were cutting into gold's safe-haven appeal.

The immediate catalyst on the geopolitical side was a sharp escalation in the Middle East. Washington ordered non-emergency staff and their families to leave Saudi Arabia following Houthi strikes on an airport and an oil field, and reports emerged that the U.S. and Israel were drawing up plans for renewed strikes on Iran after the midterm elections. Brent crude rose 1.71% to $110.67 a barrel in response, and WTI moved higher as well, with firm oil prices stoking inflation concerns that raised bets on further Federal Reserve tightening.

The Fed is still widely expected to hold interest rates steady at its meeting next week, a stance that had already been pressuring gold as traders priced in a higher-for-longer rate environment. Bitcoin was also subdued, trading around $82,860 and ranging between $82,567 and $84,786 during the session, as cryptocurrency markets entered an unusually quiet period ahead of the Fed decision despite continued institutional buying through BlackRock's spot Bitcoin ETF. The dollar slipped to near a three-week low, and Asian currencies were mixed as traders positioned ahead of several central bank meetings.