Gold stays under pressure as surging oil strengthens Fed rate-hike bets
Precious metal faces growing pressure from higher energy prices as fighting escalates in the Middle East
Gold is under pressure as surging oil prices fuel expectations of US Federal Reserve rate hikes. The precious metal declined slightly, remaining near $4,320 an ounce after falling 1.8% the previous day to the lowest since early August. US inflation data released on Sep 10 showed a 0.4% rise in the producer price index for August, the highest since May, driven by increasing energy costs due to Middle East conflicts.
Brent crude oil prices surged close to $108 a barrel, as Iran and the US engaged in escalating hostilities, including US strikes on Iranian oil tankers, Iranian missile attacks on a Jordanian airbase, and Houthis attacking Saudi Arabian infrastructure. Higher-than-expected bond yields raised doubts about the effectiveness of US Treasury Secretary Scott Bessent's unconventional intervention, which aimed to stabilize the market and curb long-term yield increases.
Gold, which usually underperforms when yields are high, is now attracting attention from investors. They are monitoring the upcoming release of the US consumer price index on Friday for additional insights into Fed policy ahead of the central bank's Sep 15-16 meeting. Swaps traders currently estimate a 70% probability of a rate hike.
Spot gold remained stable at $4,318.48 an ounce in Singapore at 7:25 am. Silver dipped 0.1% to $63.58 an ounce, falling 5.5% on Thursday, its most significant decline since June. Platinum and palladium remained unchanged. The Bloomberg Dollar Spot Index, a measure of the US dollar, held steady after climbing 0.3% the previous session.
Written by urgent.news from The Business Times - Companies & Markets's reporting — not their text. Machine-written — may contain errors; check the original before relying on it.
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