Gold edges higher as lower oil prices damp chance of rate hikes
Gold prices edged higher as falling oil prices eased inflation concerns, reducing the likelihood of further interest rate hikes by the US Federal Reserve.
Traders are tracking comments by Fed officials for clues on the path for rates
[SINGAPORE] Gold edged higher as a slump in oil prices over the past few sessions reduced the chance of further interest rate hikes by the US Federal Reserve to contain inflation.
Bullion was trading around US$4,360 an ounce, reversing course after falling the most in a week the day before.
Oil steadied on Tuesday (Sep 22) after losing more than 9 per cent over the previous four days on easing concern around Middle East exports and a renewed bout of diplomacy to end the US-Iran war.
US President Donald Trump is set to address the United Nations General Assembly in New York later on Tuesday and has indicated that he is open to meeting his Iranian counterpart, Masoud Pezeshkian, on the sidelines of the gathering.
The decline in oil prices has reduced inflationary concerns, a tailwind for gold that typically benefits when rates are lower.
Traders are also tracking comments by Fed officials for clues on the path for rates after the unanimous vote last week to hike for the first time in three years.
Chicago Fed president Austan Goolsbee said on Monday the US central bank cannot ignore repeated and persistent supply shocks, and must respond in a way that may cause economic hardship.
St Louis Fed president Alberto Musalem said additional rate rises may be needed to achieve the central bank’s inflation goal, which has not been met in more than five years.
Gold is “holding extremely strong” following the rate hike with hawkish outlook, with falling energy prices offering support, Ryan McKay, an analyst at TD Securities, wrote in a note.
“Despite a hiking cycle being priced in, the broader precious metals landscape remains extremely favourable”, with near-term weakness “increasingly seen as a buying opportunity”, he added.
Confidence in the long-term outlook for the metal has also prompted some dip-buying in recent weeks. There have been around 50 tonnes of inflows into bullion-backed exchange-traded funds so far in September, a third month of gain.
Investors are also eyeing this week’s summit between Trump and Chinese President Xi Jinping, with officials offering upbeat assessments ahead of talks expected to cover artificial intelligence, trade and investment.
US Treasury Secretary Scott Bessent described weekend meetings with China’s top trade negotiator Li Chenggang as “very successful”.
Spot gold rose 0.4 per cent to US$4,361.89 an ounce at 8.23 am in Singapore. Silver advanced 0.8 per cent to US$66.56 an ounce. Platinum and palladium edged higher.
The Bloomberg Dollar Spot Index, a gauge of the US currency, was little changed after rising 0.1 per cent the previous session. BLOOMBERG
source: The Business Times https://www.businesstimes.com.sg/companies-markets/energy-commodities/gold-edges-higher-lower-oil-prices-damp-chance-rate-hikes
