Gold edges higher as lower oil prices damp chance of rate hikes
Traders are tracking comments by Fed officials for clues on the path for rates
Gold prices rose slightly as declining oil prices reduced the likelihood of additional interest rate hikes by the US Federal Reserve to combat inflation. Bullion was trading near $4,360 per ounce, after initially dropping the most in a week the previous day. Oil prices stabilized on Tuesday (Sep 22) following a decline of over 9 percent over the past four days, due to easing concerns over Middle East exports and diplomatic efforts to resolve the US-Iran conflict.
President Donald Trump is scheduled to speak at the United Nations General Assembly in New York later on Tuesday and has expressed willingness to meet Iranian President Masoud Pezeshkian during the event. The decrease in oil prices has alleviated inflationary concerns, which are generally favorable for gold, a commodity that often performs well when interest rates are lower.
Traders are also monitoring comments from Fed officials for insights into the central bank's future rate decisions, following an unanimous decision last week to raise rates for the first time in three years. Federal Reserve Chair Austin Goolsbee stated that the US central bank cannot disregard persistent supply shocks and must take actions that could lead to economic hardship.
St Louis Fed President Alberto Musalem added that further rate increases might be necessary to achieve the central bank's inflation target, which has not been met for over five years. Gold is "holding extremely strong" after the rate increase, according to Ryan McKay, an analyst at TD Securities, who noted that falling energy prices provide support.
Despite the anticipated hiking cycle, the precious metals market remains favorable, with near-term weakness seen as a buying opportunity. Bullion-backed exchange-traded funds received approximately 50 tonnes of inflows in September, marking a third consecutive month of gains. Confidence in the long-term outlook for the metal has also encouraged some investors to buy during dips.
Over 50 tonnes of gold ETFs were purchased in September, continuing a three-month trend of accumulation. Investors are also looking at this week's summit between US President Trump and Chinese President Xi Jinping, with officials delivering optimistic assessments ahead of discussions expected to cover artificial intelligence, trade, and investment.
US Treasury Secretary Scott Bessent described meetings with China's top trade negotiator Li Chenggang as "very successful." Gold prices increased by 0.4 percent to $4,361.89 per ounce at 8:23 am in Singapore. Silver rose 0.8 percent to $66.56 per ounce, while platinum and palladium also showed minor gains. The Bloomberg Dollar Spot Index, a measure of the US currency, was relatively stable, having risen by 0.1 percent the day before.
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.
