Gold fell 0.3% to $4,128.92 an ounce on Tuesday amid rising oil prices as traders awaited next week’s US Fed interest rate decision.

Gold had a soft start to the week. Early in Asian trade, spot gold changed hands at $4,126.84.

By 0621 GMT it stood at $4,128.92, while US December futures dropped 0.3% to $4,148.50.

Oil played a big part. Brent crude hovered near a five-month high after Yemen’s Iran-aligned Houthis said on Monday they had attacked Saudi energy, airport and military targets.

Costlier energy often leads investors to expect that the Fed will keep interest rates high for longer. That matters because gold pays no interest.

Many people see it as a hedge against inflation, yet higher rates tend to dull its appeal, because bonds and other interest-paying assets start to look better than a bar of bullion.

The Fed meets on 27 and 28 October. In September, it raised its main rate by 0.25% points to a range of 3.75% to 4.00%.

Recent comments from Fed officials have cooled talk of another hike this month, but traders still see a 92% chance of one in December, according to CME’s FedWatch tool.

A key US inflation reading also lands next week. The Personal Consumption Expenditures index, known as PCE, is the gauge the Fed watches most closely as it aims for 2% inflation.

Japan is part of the picture too. Bank of Japan Governor Kazuo Ueda said underlying inflation is “quite close” to the bank’s 2% goal, helped by strong global demand for AI and a tight job market.

He signalled room for more rate increases. Other metals moved in different directions.

Spot silver rose 0.5% to $57.38 an ounce and platinum gained 0.4% to $1,647.05. Palladium fell 0.5% to $1,114.50.

Traders now wait on two events next week: the Fed’s decision and the PCE inflation reading.

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