Gold bracelets and necklaces on display for sale at a gold shop in Istanbul's Grand Bazaar (AFP)
Gold prices climbed 1% on Thursday, rebounding from a one-week low hit in the previous session as the US dollar eased, while investors assessed the likelihood of a Federal Reserve interest rate increase this month after a hot inflation report.
Spot gold rose 1% to $4,146.74 per ounce by 0501 GMT, after hitting its lowest since October 7 on Wednesday. US gold futures for December delivery gained 1.5% to $4,167.30.
The dollar slipped after scaling an 18-month peak overnight. A softer dollar makes greenback-priced bullion more affordable for buyers overseas.
"What we're seeing here is just the symptoms of a market uncertain about US interest rate policy, and that is resulting in a bit of volatility," said Kyle Rodda, senior financial market analyst at Capital.com.
"We're coming up to a really critical level for gold, which is just below the $4,000 level. If we see, again, some really strong data, then there's a view that the Fed will have to hike relatively urgently, then that will be the level of focus."
US consumer prices accelerated in September as the cost of gasoline surged. Traders are pricing in about a 29% chance of a rate hike later this month, compared with 22% before the data, according to CME's FedWatch Tool.
San Francisco Fed President Mary Daly said the US central bank will probably need to increase short-term interest rates further, though she signaled no need for a hike at the October 27-28 meeting. Vice Chair for Supervision Michelle Bowman said there's time to wait and see before any more action.
Although gold is viewed as an inflation hedge, higher interest rates reduce its appeal because it does not pay interest.
Market focus now turns to the Producer Price Index (PPI) and retail sales data due at 1230 GMT.
Among other metals, spot silver gained 0.7% to $56.01, platinum rose 1% to $1,608.20 and palladium climbed 1.3% to $1,108.14.
IMF Expects Middle East Economies to Rebound to 6.6% Growth in 2027https://english.aawsat.com/business/5329826-imf-expects-middle-east-economies-rebound-66-growth-2027
Jihad Azour, Director of the Middle East and Central Asia Department at the International Monetary Fund (IMF) attends a press conference at the IMF/World Bank 2026 Spring Meetings in Washington, D.C., US, April 16, 2026. REUTERS/Elizabeth Frantz
IMF Expects Middle East Economies to Rebound to 6.6% Growth in 2027
Jihad Azour, Director of the Middle East and Central Asia Department at the International Monetary Fund (IMF) attends a press conference at the IMF/World Bank 2026 Spring Meetings in Washington, D.C., US, April 16, 2026. REUTERS/Elizabeth Frantz
The International Monetary Fund expects the economies of the Middle East, North Africa and Pakistan to rebound to growth of 6.6 percent in 2027, following a projected contraction of 1.3 percent this year, amid the economic fallout from the regional war and disruptions to energy production and trade, which have affected countries across the region to varying degrees.
Jihad Azour, the IMF's director for the Middle East and Central Asia, said economies directly affected by the conflict are facing severe pressures, while other economies in the region, along with most countries in the Caucasus and Central Asia, have shown greater resilience.
He explained that the path of the recovery will depend largely on how quickly energy production and trade return to normal and on countries’ ability to maintain macroeconomic stability.
The forecasts come after the economies of the Middle East, North Africa and Pakistan grew by 3.3 percent in 2025, illustrating the scale of the shock expected this year before a strong rebound next year.
Azour stressed, however, that the overall projections mask significant disparities among the region’s economies and that the recovery will not be uniform across countries.
Oil Exporters and Importers
Azour said oil-exporting countries directly affected by disruptions to energy production and trade will experience a marked contraction in 2026, although higher oil prices will provide some support to their fiscal and external positions.
A gradual recovery in production and trade is expected to drive a strong rebound in GDP growth in 2027, although output levels will remain below the trajectory projected before the outbreak of the conflict.
By contrast, economic activity in the region’s oil-importing countries has remained relatively resilient during 2026 and is expected to continue doing so. Workers’ remittances, tourism revenues, favorable financial conditions and government support have helped cushion the immediate impact of the shock, although the policy space available to governments is narrowing.
The IMF expects inflation in these economies to rise moderately in 2026 before gradually easing thereafter.
The Chinese-flagged container shipping vessel Hui Fa transits the Gulf of Oman on October 13, 2026. (Photo by AFP)
Lower Inventories, Greater Risks
Azour noted that the impact of the energy shock has been less severe than initial estimates suggested, thanks to surpluses accumulated before the war, production by non-Gulf countries, alternative transportation routes, adjustments in demand and drawdowns from inventories.
He cautioned, however, that these factors have provided time for adjustment but are not sustainable resources. Available inventories have declined and spare production capacity has narrowed, leaving markets more vulnerable to larger price increases should disruptions recur.
Azour identified a prolonged war as the most significant risk to the outlook, warning that further disruptions to energy production, shipping routes or critical infrastructure would weaken economic activity among Gulf oil exporters, increase inflationary pressures and exacerbate fiscal and external strains across the region.
He also warned that tighter global financial conditions could weaken demand, raise borrowing costs and increase pressure on currencies, particularly in economies with substantial sovereign debt-financing needs or a heavy reliance on external financing.
Low-income and fragile economies remain the most vulnerable to these risks because of their dependence on food imports and limited fiscal space, at a time when official development assistance is also declining.
Call for Targeted Support and Rebuilding Fiscal Buffers
Azour urged policymakers to prioritize price stability and fiscal sustainability, using monetary policy as the first line of defense when inflationary pressures emerge, complemented by prudent fiscal policy, particularly in countries with limited financial resources.
He stressed the importance of rebuilding fiscal buffers to withstand future shocks by strengthening domestic revenues, improving spending efficiency and developing stronger fiscal frameworks. He cautioned against broad-based subsidies, favoring instead temporary and targeted cash assistance for the groups most affected, helping keep the cost of intervention within budgetary limits.
Over the longer term, Azour emphasized the importance of strong institutions, credible monetary frameworks and central bank independence, alongside greater trade diversification, deeper regional integration and a stronger capacity to adopt new technologies, including artificial intelligence, to boost productivity and support growth.
Azour noted that the IMF has approved approximately $48 billion in financing for countries in the region since 2020. During fiscal year 2026, it also carried out around 437 technical assistance and capacity-building projects in 31 countries.
The IMF is scheduled to release its full regional report in Dubai on October 22, providing a more detailed assessment of economic developments and policy priorities.
IMF Plans Mission to Lebanon in Novemberhttps://english.aawsat.com/business/5329805-imf-plans-mission-lebanon-november
A view of the International Monetary Fund (IMF) logo at its headquarters in Washington, DC, US, November 24, 2024. (Reuters)
IMF officials held good discussions with Lebanese authorities this week that will continue in coming weeks, with IMF staff to visit the country in November, a senior IMF official said on Thursday.
Athanasios Arvanitis, deputy director of the IMF's Middle East and Central Asia Department, said the focus of the discussions had been on the banking sector and ensuring that the Lebanese people had confidence in the system, Reuters reported.
Restoring debt sustainability was another key issue, Arvanitis said.
Oil Prices Retreat as Investors Weigh Supply Outlook, Middle East Tensionshttps://english.aawsat.com/business/5329796-oil-prices-retreat-investors-weigh-supply-outlook-middle-east-tensions
Oil Prices Retreat as Investors Weigh Supply Outlook, Middle East Tensions
FILE PHOTO: Oil storage tanks and facilities of a Sinopec plant in Shanghai, China, March 26, 2026. REUTERS/Go Nakamura/File Photo
Oil prices fell more than 1% on Thursday as investors weighed risks to supply from attacks on shipping through the Strait of Hormuz against US efforts to cut petroleum shipping costs by easing sanctions on vessels.
Brent crude futures fell $1.64, or 1.6%, to $104.42 a barrel by 0337 GMT, while US West Texas Intermediate crude futures were down 98 cents, or 1%, to $94.11, reversing gains from the previous session.
WTI rose to a three-week high in the prior session after Iran said it was deploying new tactics to target ships in the Strait of Hormuz and keep oil prices high.
A container ship and a dry bulk carrier both sank near the strait in the past 24 hours after being hit by projectiles in separate incidents, maritime officials said on Wednesday.
Attacks around the waterway have surged over the past 10 days, with Iran saying it is stepping up strikes in response to the US blockade of its ports and tougher sanctions introduced last month.
With the Iran war having disrupted shipping and driven up freight costs to record highs, the Trump administration is considering easing sanctions on so-called shadow-fleet vessels that have transported oil and petroleum products from countries including Russia, Iran and Venezuela to help ease prices, a US official said on Wednesday.
The new talks center on the United States potentially allowing "legal oil" to flow on previously sanctioned vessels, the US official said.
Increased output from Russia and the Middle East has kept a lid on prices. Russia's crude oil production rose by 65,000 barrels per day in September to 8.43 million bpd but remained down 870,000 bpd year over year, the International Energy Agency said on Wednesday.
The IEA also said crude oil exports from Middle East Gulf producers rose by 4.4 million bpd in September to around 75% of prewar levels.
"While there is little concrete evidence of a near-term peace deal, oil continues to find its way to buyers through alternative routes and logistical arrangements," said Phillip Nova's head of market insights, Priyanka Sachdeva, in a client note.
"These workarounds have helped prevent a more severe supply shock, although they come at a higher cost and leave global flows vulnerable to further disruption."
In the US, crude oil and distillate inventories fell, while gasoline stocks rose last week, market sources said on Wednesday, citing data from the American Petroleum Institute.
Crude stocks fell by 11.1 million barrels in the week ended October 9, sources said. That was a much bigger draw than analysts polled by Reuters expected.
"Despite the sharp inventory draw, oil prices barely reacted. The failure to rise on bullish news suggests investors are cautious about chasing prices higher at current levels," said Haitong Futures in a note on Thursday.
Official numbers from the US Energy Information Administration are due at 12 p.m. EDT (1600 GMT), delayed by a day following the Columbus Day holiday on Monday.
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