Gold Rises to $4,361 as Oil Drop Eases Rate Hike Fears
Spot gold climbed to 4,361.89 dollars per ounce after crude prices fell over four days, reducing inflation pressure for the Federal Reserve.
Key points
- Spot gold rose 0.4 percent to 4,361.89 dollars per ounce as oil prices dropped more than nine percent recently.
- Lower oil costs reduced inflation fears, dampening the likelihood of further Federal Reserve interest rate hikes.
- Bullion-backed exchange-traded funds saw about 50 tonnes of inflows in September, marking a third straight monthly gain.
Spot gold rose 0.4 percent to 4,361.89 dollars per ounce in early Singapore trade. This gain reversed a one-week low recorded the previous day as market sentiment shifted.
Crude oil prices fell more than nine percent over the last four sessions. This decline reduced immediate inflationary pressures, a key tailwind for the precious metal.
Oil drop lowers rate hike risk
Easing Middle East tensions and renewed diplomacy reduced supply concerns for energy markets. Lower oil costs weaken the case for aggressive monetary tightening by policymakers.
The Federal Reserve unanimously voted to raise rates for the first time in three years last week. Officials remain divided on the necessity of further increases to control inflation.
Chicago Fed President Austan Goolsbee stated the bank must address persistent supply shocks. St. Louis Fed President Alberto Musalem argued additional hikes may be needed to meet goals.
Investors view dips as buying chances
Ryan McKay of TD Securities noted that falling energy prices support gold prices. He described recent weakness in the market as an increasing buying opportunity for investors.
Bullion-backed exchange-traded funds recorded approximately 50 tonnes of inflows in September. This marks a third consecutive month of gains for the asset class.
Geopolitical talks add to market focus
US President Donald Trump is scheduled to address the United Nations General Assembly. He has indicated openness to meeting Iranian President Masoud Pezeshkian on the sidelines.
US Treasury Secretary Scott Bessent described recent trade talks with China as very successful. Investors are watching this week’s summit between Trump and Chinese President Xi Jinping.
