Federal Reserve set to raise interest rates amid oil flow disruptions

Gold remained under pressure at around $4,290 an ounce as rising oil supply disruptions fueled expectations for a Federal Reserve rate increase.

Traders were pricing in a 92% probability of a hike at the central bank’s meeting this week, after bullion dropped more than 1% in the previous session to its lowest level in five weeks, according to data from CME FedWatch Tool.

Oil gained after Saudi Arabia shut its East-West pipeline following attacks last week, threatening millions of barrels a day of shipments that had been moving through the route to avoid disruption in the Strait of Hormuz. The kingdom has not said how long the pipeline closure will last or how much additional oil it could move through Hormuz to make up for the lost flows.

Higher energy prices could add to inflation pressures, while the 10-year Treasury yield briefly touched 5% on Monday, its highest level in almost three years. Gold has fallen more than 3% in September after trading above $4,600 an ounce in late August.