Gold climbed to $4,129.69 an ounce on Monday as tumbling oil prices eased inflation worries, putting bullion on course for its next big test: US inflation data due on Tuesday.

Reuters reported that spot gold rose 1.6% to $4,129.69 an ounce by 0220 GMT on Monday. US gold futures for December delivery rose 1.6% to $4,139.00. The gain builds on a rise of about 5% last week.

Comex front-month gold settled up 1% in New York at $4,105.00 an ounce, its highest settlement since 21 October, according to Dow Jones Market Data cited by the Wall Street Journal. In the UK, gold traded at £3,079 an ounce, or £98.89 a gram for 24-carat, early on Tuesday.

Why softer oil lifts gold

Lower oil prices can ease inflationary pressure and reduce expectations that interest rates will stay higher for longer, lowering the opportunity cost of holding non-yielding bullion. “Lower oil reduces near-term inflation pressure, which is gold-friendly even if the longer-term rate path stays restrictive,” analysts told the Journal.

The pullback in energy prices last week is helping to quell inflation anxieties, traders said, and sets out a flatter path for rate rises from central banks.

The Fed question

The rally comes even as traders price a high chance of another US rate rise. Traders see around a 79% chance that the Federal Reserve will raise rates in December, according to CME’s FedWatch tool, up from 71% before last Friday’s jobs data. The October jobs report showed employers added 165,000 jobs, far above the 65,000 expected, with unemployment at 4.1%.

The Fed held its benchmark rate at 3.75% to 4% at its October meeting, with two policymakers preferring another quarter-point increase.

All eyes now turn to Tuesday’s US consumer price index for October, released at 8:30 a.m. ET (13:30 GMT). Economists expect headline CPI up 0.3% on the month and core CPI, which strips out food and energy, up 0.2%. There will be no annual reading for October because the government shutdown a year ago prevented the Bureau of Labor Statistics from collecting some of the data. Producer prices follow on Friday 13 November.

Central banks keep buying

Underpinning gold is steady official demand. The World Gold Council said central banks and other official institutions added a net 321 tonnes to reserves in the third quarter of 2026, up 42% year on year and the strongest quarterly total since the final quarter of 2024. The gold price averaged $4,262 an ounce over the quarter, the council said.

Goldman Sachs has cut its year-end 2026 gold target to $4,150 an ounce and sees $4,800 by the end of 2027.

For now, the $4,000 level is the line analysts keep returning to. A hot inflation print on Tuesday threatens it, while a calm one supports the case for holding above it. Silver, often moving with gold, also gained: front-month Comex silver climbed 1.5% to $52.564 an ounce on Monday, its best closing value since 28 October.