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 rose more than 1 per cent on Thursday (Sep 17) as investors digested the US Federal Reserve’s interest rate hike and its signal that further policy tightening may follow, while an earlier rally in oil prices lost momentum.
Spot gold was up 1.1 per cent at US$4,310.49 per ounce as at 0149 GMT, after hitting a near six-week low on Wednesday.
US gold futures for December delivery were down roughly 1 per cent at US$4,348.70.
Oil prices fell, extending losses from the previous session, as reports of Saudi Arabia offering extra crude cargoes through Oman reduced fears of supply disruptions.
“Oil prices remain a key factor to watch. If oil prices continue to decline, that could support gold prices moving higher, at least from a medium-term perspective. Until that materialises, I expect gold to remain range-bound,” said Kelvin Wong, senior market analyst at Oanda.
The current uptick in gold is also largely driven by technical factors, with the Fed’s hawkish message already largely priced into the market, he added.
Although gold is considered an inflation hedge, higher rates reduce its appeal by boosting the attractiveness of interest-bearing assets.
The Fed raised interest rates on Wednesday and flagged more hikes in the coming months, with new US central bank chief Kevin Warsh joining a unanimous decision that effectively acknowledges the Trump administration’s inability so far to control inflation that policymakers worry could worsen.
Updated quarterly economic projections showed 16 of 18 policymakers anticipate at least one more quarter-percentage-point hike by the end of 2026, with only two of them seeing rates remaining stable from here.
The Bank of England looks set to keep rates on hold on Thursday but investors are watching for any hint that higher energy prices could force it to follow the Fed’s example.
In the Middle East, Saudi war planes pounded Yemen, the Houthis said, as the Iran-backed fighters solidified their gains after a lightning advance.
Spot silver rose 1.4 per cent to US$63.83, platinum firmed 1.6 per cent to US$1,780.55 and palladium climbed 2 per cent to US$1,295.00. REUTERS
Decoding Asia newsletter: your guide to navigating Asia in a new global order. Sign up here to get Decoding Asia newsletter. Delivered to your inbox. Free.
Share with us your feedback on BT's products and services
