Gold steadies as traders weigh inflation and Fed hike outlook

[SINGAPORE] Gold was steady as traders weighed the risk of persistent inflation and the path for interest rates after the US Federal Reserve’s first hike since 2023.

Bullion was trading around US$4,375 an ounce, after posting a moderate gain the week before.

Several Fed policymakers are due to speak publicly this week after voting unanimously to raise interest rates by a quarter percentage point at their Sep 15 to 16 meeting.

The move was a bid to help cool inflation that has not fallen below the Fed’s 2 per cent target in more than five years.

Minneapolis Fed president Neel Kashkari was first off the mark, saying on Sunday (Sep 20) inflation remains too high and pressures have broadened beyond the oil-price shock of the Iran war.

“The inflation that the American people are feeling every day is much beyond just oil prices – it is in all aspects of the economy,” he said in a television interview.

Chicago Fed president Austan Goolsbee is due to speak later on Monday and New York Fed president John Williams on Tuesday.

Oil steadied as traders tracked supply risks in the Middle East at the start of a week that will be marked by intensified diplomacy over the US-Iran war.

US President Donald Trump said in a Fox News interview that he would “probably” be open to a meeting with his Iranian counterpart, Masoud Pezeshkian, on the sidelines of the United Nations General Assembly in New York.

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Qatar’s prime minister said that messages were being passed between the two sides.

Higher energy prices reinforce bets on interest rates staying elevated for longer, a negative for non-yielding bullion.

Markets were reassured by Fed chair Kevin Warsh raising rates, despite repeated calls from Trump to lower them.

“We have largely moved past the Fed independence narrative following Warsh’s hike, meanwhile the forward guidance on rates came in broadly as expected,” leaving gold with “no real narrative and relatively few fresh catalysts in the near term”, said Justin Lin, an analyst at Global X ETFs.

“In this lull, gold will likely trade more closely off movements in oil prices and the broader inflation outlook.”

Spot gold was little changed at US$4,378.10 an ounce at 9.25 am in Singapore. Silver rose 0.8 per cent to US$66.79 an ounce.

Platinum and palladium edged higher. The Bloomberg Dollar Spot Index, a gauge of the US currency, was stable after rising 1 per cent the previous week. BLOOMBERG