Oct 28 (Reuters) - Gold prices edged lower on Wednesday as inflation worries simmered over high oil prices, while investors awaited the Federal Reserve's policy decision later in the day.
Spot gold edged 0.2% lower $4,050.55 per ounce by 1249 GMT. U.S. gold futures for December delivery fell 0.2% to $4,064.60 per ounce.
Oil prices rose over 1% after an attack on a refinery in Saudi Arabia, the world's top crude exporter, renewed concerns about supply risks because of conflicts in the Middle East.
"The rise in oil prices and the risk that it results in the Fed taking a more hawkish stance than market participants expect appears to be weighing on gold prices," said Hamad Hussain, climate and commodities economist at Capital Economics.
Elevated energy prices bolster expectations of higher-for-longer interest rates, increasing the opportunity cost of holding non-yielding gold.
The Fed is widely expected to leave its benchmark interest rate unchanged when it announces its decision at 1800 GMT. Traders are pricing in an 83% probability of a hike in December, according to CME's FedWatch Tool, opens new tab.
Investors also await US Personal Consumption Expenditures data, due on Thursday, a gauge the Fed watches closely as it targets 2% inflation.
"Should PCE come in soft and the Fed fall short of hawkish expectations, bullion could push higher," said Nikos Tzabouras, an independent financial markets analyst.
Analysts cut their 2026 gold price forecast for a second straight quarter due to high Treasury yields, a strong US dollar and expectations that rates will stay higher for longer, but still expect a recovery in 2027, a Reuters survey showed.
Additionally, analysts and traders cut their platinum and palladium price forecasts for 2026 for a third straight quarter, a Reuters survey showed.
Among other metals, spot silver fell 0.5% to $54.09, platinum rose 0.1% to $1,542.22, and palladium dropped 0.4% to $1,022.44.
Reporting by Sherin Sans in Bengaluru; Editing by Harikrishnan Nair and Varun H K
