New York:Gold prices dipped below $4,100 an ounce on Thursday as silver saw a decrease of approximately 3.6%. The decline in precious metals is attributed to rising oil prices, which have fueled inflation concerns and expectations that interest rates might remain elevated.

According to Anadolu Agency – English, gold was trading at $4,088.95 an ounce, marking a decrease of $52.15 or 1.26% by 0800GMT. Silver experienced a drop of $2.07, or 3.57%, reaching $55.89 an ounce. The setback in both metals comes after gains in the previous session were erased due to renewed tensions in the Middle East, leading to an increase in crude prices.

The increase in oil prices followed a drone strike on Saudi Aramco's Shaybah oil field, which resulted in the deaths of two individuals. In response, the United States ordered the departure of some personnel and family members from its diplomatic missions in Saudi Arabia. The heightened energy prices have intensified concerns over ongoing inflation, impacting expectations for potential monetary easing.

The U.S. Federal Reserve is anticipated to keep interest rates unchanged in its upcoming meeting next week. This expectation remains despite recent comments by Chair Kevin Warsh, which did not alter market predictions for a pause. However, markets are still considering a potential rate hike in December as inflation pressures driven by energy costs persist.

Gold is usually regarded as a safeguard against inflation, but the appeal of holding gold diminishes with higher interest rates due to the increased opportunity cost of holding non-yielding assets. Meanwhile, the European Central Bank and the Bank of Japan are also expected to maintain their current interest rates in the upcoming week.

Over the past month, gold has fallen by 4.62%, while silver has declined by 13.11%.