Times24.net: Gold prices rose on Thursday (September 17) as investors assessed the US Federal Reserve’s first interest rate increase in more than three years and its signal that further tightening could follow. Spot gold gained 0.8% to $4,295.26 an ounce by 0443 GMT after touching a nearly six-week low on Wednesday. US gold futures for December delivery fell 1.2% to $4,333.90. Oil prices also moved lower after reports that Saudi Arabia was offering additional crude cargoes through Oman, easing some concerns about supply disruptions in the Middle East.
Kelvin Wong, senior market analyst at OANDA, said further declines in oil prices could support gold over the medium term, while the precious metal was likely to remain range-bound unless that trend became more pronounced. He said Thursday’s rebound was also being driven largely by technical factors, with the Fed’s hawkish message already mostly reflected in market pricing.
Gold is traditionally viewed as a hedge against inflation, but higher interest rates tend to reduce its appeal by increasing returns available on interest-bearing assets. The Federal Reserve raised its benchmark rate by 25 basis points on Wednesday to 3.75%-4% in a unanimous decision, its first increase since July 2023.
Updated Fed projections showed policymakers expected further tightening. The median forecast put the federal funds rate at 4.1% at the end of 2026, implying at least one additional quarter-point increase from the new target range. Sixteen of the Fed’s 18 policymakers projected at least one more increase this year, according to Reuters. The Bank of England is expected to keep its benchmark rate unchanged at 3.75% on Thursday, although higher energy prices have increased expectations that further tightening could eventually be required. UK inflation rose to 3.1% in August, above the central bank’s 2% target.
Source: Agencies
