Gold slides as oil, Fed rate concerns lift dollar
As energy prices rise and the Fed looks into raising interest rates, gold pays the price in an uncertain market.
On Thursday, gold prices plummeted to a one-week low as a combination of factors weighed on the precious metal. This decline occurred amid rising oil prices, a stronger US dollar, and expectations that the Federal Reserve would adopt a more aggressive stance on interest rates. Spot gold fell by 0.4%, settling at $4,271.16 an ounce in New York, marking its lowest level since September 16.
US gold futures for December delivery also declined by 0.3%, reaching $4,306. Gold market dynamics have been significantly influenced since the Federal Reserve announced its intention to raise interest rates last week. Higher interest rates typically have a negative impact on bullion, as it does not yield interest, making assets that pay interest comparatively more appealing.
Oil prices jumped by approximately 1% following talks between the US and Iran, which showed little progress towards ending the ongoing conflict. Rising energy costs can exacerbate inflationary pressures, potentially complicating the outlook for central banks aiming to bring price growth under control. This pressure on bullion was further intensified as the dollar surged to a two-month high, and US 10-year Treasury yields neared a near two-decade high, increasing the opportunity cost of holding the non-yielding metal.
Meanwhile, silver prices fell by 1.8% to $63.29 per ounce, platinum declined marginally by 0.2% to $1,746.44, while palladium increased by 0.5% to $1,266.40.
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