Gold rises as investors digest Fed hike, oil rally stalls

Gold prices increased on Thursday as investors processed the US Federal Reserve's interest rate hike and its indication that additional tightening may occur, while a previous surge in oil prices lost steam. Spot gold climbed 0.8% to $4,295.26 per ounce, after dipping to a near six-week low on Wednesday. US gold futures for December delivery fell 1.2% to $4,333.90.

Oil prices softened, further losses due to news of Saudi Arabia supplying additional crude through Oman. Analyst Kelvin Wong of OANDA noted that oil prices remain a crucial factor to monitor. If oil prices continue to fall, it could bolster gold prices in the medium term. For now, gold is expected to remain within a range. The uptick in gold is also attributed to technical factors, as the hawkish Fed message had already been priced into the market.

Despite being viewed as an inflation hedge, higher rates diminish its appeal by making interest-bearing assets more attractive. During Wednesday's Fed meeting, the central bank increased interest rates and hinted at more hikes, with all 18 policymakers anticipating at least one quarter-point hike by year-end. Only two expected rates to stay steady.

The Bank of England was poised to maintain rates on Thursday but investors were watching for any hint that rising energy prices could compel it to follow the Fed's lead. Geopolitically, US President Donald Trump expressed hope for an imminent end to the Iran conflict, which has been ongoing for seven months and escalated with Saudi airstrikes in Yemen and Houthi attacks on Saudi cities using drones and missiles.

Silver prices jumped 1.2% to $63.73, platinum gained 1.7% to $1,783.56, and palladium increased 2.2% to $1,296.70.