Gold rises ahead of US Fed rate decision
The spot price of gold rose by 0.8% on Wednesday, September 16, to $4,328.39 per ounce as of 03:10 GMT. Market participants were awaiting the US Federal Reserve's interest rate decision, while oil prices were falling, Asharq Al-Awsat reports.
Expectations of a rate hike
Traders put the probability of the Fed raising rates by at least 25 basis points at 92.4%, according to CME FedWatch data. A press conference by Fed Chair Kevin Warsh was due to take place after the decision was announced.
US December gold futures, meanwhile, fell by 0.9% to $4,369.50 per ounce. On Monday, the spot price of the metal dropped to its lowest level in more than a month.
Frank Walbaum, an analyst at trading platform Naga.com, said that hawkish Fed rhetoric could put pressure on gold. At the same time, more dovish signals could weaken expectations of further rate hikes and support the metal.
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Oil and other metals
Oil prices fell after an unexpected increase in US crude oil inventories. Investors were also assessing supply risks after Saudi Arabia suspended oil loading at the port of Yanbu.
Gold is traditionally considered a hedge against inflation, but higher interest rates increase the opportunity cost of holding the metal, which does not generate interest income. Commerzbank said that the resilience of gold prices could be supported by fiscal concerns, high yields on long-term government bonds, and growing political risks in the United States.
Silver rose by 1.5% to $64.60 per ounce, platinum gained 0.7% to $1,788.25, and palladium increased by 1.6% to $1,309.80 per ounce.
