Gold Steadies Near $4,370 After Fed Rate Hike as Investors Watch Inflation, Oil
Summary
- Gold was little changed near $4,370 an ounce after the Federal Reserve’s first rate hike in more than three years.
- Markets are watching comments from Fed officials, as inflation, international oil prices, and Middle East developments remain the main variables for gold prices.
- If energy prices stay high, prolonged high interest rates could weigh on non-yielding gold, and bullion may be driven more by oil prices and the broader inflation trend.
Forecast Trend Report by Period
Gold steadied near $4,370 an ounce after the Federal Reserve’s first interest-rate increase in more than three years, as investors assessed the prospects for further tightening and monitored inflation trends.
Bloomberg reported on September 20 that spot gold was little changed at $4,378.10 an ounce as of 9:25 a.m. in Singapore. Gold posted a modest gain last week.
The Fed unanimously raised its benchmark interest rate by 25 basis points at its September 15-16 meeting. It was the first rate increase since 2023, aimed at curbing inflation that has remained above the central bank’s 2% target for more than five years.
Markets are focused on comments due this week from Fed officials. Minneapolis Fed President Neel Kashkari said a day earlier that US inflation remains too high and has spread across the broader economy beyond the oil shock tied to the Iran war. Chicago Fed President Austan Goolsbee and New York Fed President John Williams are also scheduled to speak publicly.
Developments in the Middle East and international oil prices are also key variables for gold. President Donald Trump has left open the possibility of meeting Iranian President Masoud Pezeshkian on the sidelines of the United Nations General Assembly, while Qatar is also reported to be relaying messages between the two sides.
Still, if energy prices remain elevated because of Middle East-related supply concerns, inflation pressures could persist and raise the likelihood of higher rates for longer. That would weigh on gold, which offers no interest.
Justin Lin, an ETF analyst at Global X, said concerns over Fed independence have eased substantially after Fed Chair Kevin Warsh raised rates, and the central bank’s guidance on the future path of rates was broadly in line with expectations. He said gold may take more direction from oil prices and broader inflation trends for now, with few fresh catalysts likely to move the metal in the near term.
At the same time, silver rose 0.8% to $66.79 an ounce, while platinum and palladium also edged higher.
Suehyeon Lee
shlee@bloomingbit.ioI'm reporter Suehyeon Lee, your Web3 Moderator.