Gold rises over 1pct as investors digest Fed hike, oil rally stalls

Gold prices surged over one percent on Thursday, following the U.S. Federal Reserve's interest rate hike and its hint that additional policy tightening could be on the horizon. At the same time, an earlier rally in oil prices cooled off. The spot price of gold reached $4,310.49 per ounce, up 1.1 percent, after hitting a six-week low the day before. US gold futures for December delivery declined about one percent to $4,348.70.

Reports of Saudi Arabia offering extra crude shipments through Oman dampened concerns about supply disruptions, contributing to the oil price decline. Gold's recent rise is partly driven by technical factors, with the hawkish message from the Fed already largely priced into the market, according to Kelvin Wong, a senior market analyst at OANDA.

The Federal Reserve's decision to raise interest rates and signal more hikes in the coming months has reduced gold's appeal as an inflation hedge, as higher rates make interest-bearing assets more attractive. The Fed raised rates on Wednesday and unanimously decided to continue tightening policy, reflecting the Trump administration's struggle to control inflation.

Economic projections indicate that 16 out of 18 policymakers expect at least one more quarter-percentage-point rate increase by the end of the year, with only two expecting rates to remain stable.

Meanwhile, the Bank of England is expected to keep interest rates on hold on Thursday, but investors are watching for any indication that higher energy prices might force the central bank to follow the Fed's lead. In the Middle East, Saudi warplanes continued to attack Yemen, with the Houthis reporting the attacks.