Gold Climbs Over 1% as Markets Absorb Fed Rate Hike, Oil Rally Fades
Gold rebounded over 1% as investors weighed the Fed's rate hike and hawkish outlook, while oil slipped on easing supply concerns.
Gold prices advanced more than 1% on Thursday, recovering from a near six-week low touched in the previous session, as investors worked through the US Federal Reserve's latest rate increase and its indication that more tightening could lie ahead.
Spot gold gained 1.1% to trade at $4,310.49 per ounce as of 0149 GMT. US gold futures for December delivery, however, moved in the opposite direction, slipping roughly 1% to $4,348.70.
The Fed raised interest rates on Wednesday and signalled additional hikes in the months to come. The decision was unanimous, with new central bank chief Kevin Warsh joining the vote — a move that effectively acknowledges the Trump administration's limited success so far in containing inflation that policymakers fear could deteriorate further.
Updated quarterly projections showed 16 of 18 policymakers expect at least one more quarter-percentage-point increase before the year ends, while only two foresee rates holding steady from current levels.
Higher rates typically weigh on gold. Although the metal is viewed as a hedge against inflation, rising borrowing costs make interest-bearing assets more attractive by comparison.
Oil prices declined, extending losses from the prior session, after reports that Saudi Arabia was offering additional crude cargoes through Oman eased worries about supply disruptions. According to Kelvin Wong, senior market analyst at OANDA, oil remains a crucial variable to monitor. Should crude prices keep falling, that could help lift gold over the medium term, he said, adding that until such a shift occurs, gold is likely to trade within a range.
Wong also noted that the current bounce in gold is largely technical in nature, with the Fed's hawkish stance already mostly reflected in market pricing.
Elsewhere, the Bank of England was expected to leave rates unchanged on Thursday, though investors are alert to any signal that elevated energy prices might push it to mirror the Fed's approach.
In the Middle East, Saudi warplanes struck Yemen, according to the Houthis, as the Iran-backed group consolidated its position following a rapid advance.
Among other precious metals, spot silver rose 1.4% to $63.83, platinum added 1.6% to reach $1,780.55, and palladium jumped 2% to $1,295.00.