Gold slips on higher oil; markets assess Warsh comments after Fed holds rates steady

By Noel John and Anjana Anil

Oct 28 (Reuters) - Gold prices fell on Wednesday as higher oil weighed, while market participants assessed comments from US Federal Reserve Chair Kevin Warsh after the central bank held benchmark interest rates steady in a move that was broadly anticipated.

Spot gold lost 0.5% to $4,039.39 per ounce by 3:12 p.m. EDT (1912 GMT). US gold futures for December delivery settled 0.6% lower at $4,051.60 per ounce.

The Fed held interest rates steady in the 3.75%-4.00% range, as expected, opting to delay any changes to borrowing costs until after next week's US midterm elections and awaiting further data on the path of inflation.

Bullion was little changed after the policy statement, but briefly turned positive as Warsh spoke, before falling again.

"Long-end Treasury yields are moving higher with market not quite satisfied with Warsh's explanation of the hold today; higher rates will keep some pressure on gold. I don't think metals will sell off aggressively but the upside may be limited," said independent metals trader Tai Wong.

The Fed upgraded its assessment of the economy while acknowledging inflation "remains elevated." At the press conference following the release, Warsh said the central bank has made clear its willingness and readiness to act.

Yield on the 10-year Treasury note was last up 4.11 basis points at 5.034%. US/

Traders are now pricing in an 86% probability of a US rate hike in December, up from 88% before the announcement, CME's FedWatch Tool showed. FEDWATCH

Meanwhile, Brent futures rose over 1%, stoking inflation concerns, after an attack on a refinery in Saudi Arabia renewed concerns about supply risks linked to conflicts in the Middle East. O/R

Rising inflation could force central banks to adopt higher rates, which dents non-yielding gold's appeal.

Traders now await US Personal Consumption Expenditures data due on Thursday for further insight into monetary policy path.

Analysts lowered their 2026 precious metals price forecasts in Reuters polls, citing weaker demand, elevated Treasury yields and a strong US dollar, though all metals are expected to rebound in 2027. PREC/POLL

China's net gold imports via Hong Kong in September rose over 28% from August to a five-month high, due to restocking ahead of the Golden Week holiday, with additional support from investor demand.

Spot silver slid 1.4% to $53.58 per ounce, platinum eased 0.4% to $1,534.50, and palladium declined 1.1% to $1,014.50.