Gold rises over 1% as investors digest Fed hike, oil rally stalls
The uptick is also due to technical factors, as markets already largely priced in hawkish messaging
Gold prices climbed over 1 percent on Thursday (September 17) as traders absorbed the United States Federal Reserve's interest rate hike and its implication that additional policy tightening could be forthcoming. In contrast, earlier gains in oil prices have stalled. As of 0149 GMT, spot gold was valued at US$4,310.49 per ounce, having initially reached a near six-week low on Wednesday.
US gold futures for December delivery were down roughly 1 percent, at US$4,348.70. Oil prices continued to decline, extending losses from the previous day, as Saudi Arabia reportedly offered additional crude shipments through Oman, alleviating concerns about potential supply disruptions. Analyst Kelvin Wong of Oanda noted that while gold can serve as an inflation hedge, higher interest rates diminish its allure by enhancing the attractiveness of interest-bearing assets.
The Federal Reserve's decision to raise rates on Wednesday and to continue hikes in the upcoming months, as confirmed by new US central bank chief Kevin Warsh, resulted in investor confidence that the policy tightening would persist. Updated economic projections indicated that 16 out of 18 policymakers anticipated at least one additional quarter-point increase in interest rates by the end of 2026, with only two projecting rates to remain stable.
The Bank of England was expected to maintain its rates unchanged on Thursday, but investors were monitoring for any indication that higher energy prices might necessitate a similar move from the Fed. In the Middle East, Saudi warplanes targeted Yemen, according to the Houthis, as the Iran-backed rebels consolidated their advances following a rapid advance.
Silver prices increased by 1.4 percent to US$63.83, platinum rose 1.6 percent to US$1,780.55, and palladium surged 2 percent to US$1,295.00.
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