42 mins ago
Gold Rises as Lower Oil Prices Ease Rate Hike Bets
Gold prices moved higher after oil became cheaper.
Cheaper oil can reduce worries that prices for other goods will rise quickly.
That may make investors think the Federal Reserve will be less likely to raise interest rates again.
Gold often becomes more attractive when interest rates are lower.
Some Federal Reserve officials still say more rate increases may be needed to control inflation.
Investors are also encouraged by continued buying of gold-backed funds.
Donald Trump and Xi Jinping are expected to discuss trade, investment and artificial intelligence.
Gold was trading near $4,360 per ounce in Singapore.
Gold rose 0.4% to $4,361.89 an ounce in Singapore after falling the previous day.
Oil prices had dropped more than 9% over four days, easing concerns about inflation and future Federal Reserve rate hikes.
The Federal Reserve unanimously raised rates last week, while officials offered differing views on whether more increases are needed.
Bullion-backed exchange-traded funds recorded about 50 tons of inflows in September, marking a third consecutive monthly gain.
Investors are also watching a planned Donald Trump–Xi Jinping summit covering artificial intelligence, trade and investment.
- Who
- Gold investors, the Federal Reserve and its officials, Donald Trump, Xi Jinping and other global market participants.
- What
- Gold prices edged higher as falling oil prices reduced expectations for additional Federal Reserve interest-rate hikes.
- Where
- Gold was quoted in Singapore, while Donald Trump was scheduled to address the United Nations General Assembly in New York.
- When
- Tuesday, after gold fell the most in a week the previous day; September has also seen about 50 tons of bullion-backed fund inflows.
- Why
- Oil prices declined as concerns about Middle East exports eased and diplomacy involving the United States and Iran resumed, reducing inflation worries and the perceived need for more rate hikes.
Lower-rate outlook
Higher-rate outlook
Future interest-rate decisions
Lower-rate outlook
Falling oil prices have reduced inflation concerns and the likelihood of further Federal Reserve hikes, supporting gold.
Higher-rate outlook
St. Louis Fed President Alberto Musalem said additional rate increases may be needed to reach the central bank’s inflation goal.
Response to supply shocks
Lower-rate outlook
Lower energy prices may ease inflation without requiring additional monetary tightening that could hurt economic growth.
Higher-rate outlook
Chicago Fed President Austan Goolsbee said the Federal Reserve cannot ignore repeated and persistent supply shocks and may need to respond even if that causes economic hardship.
Key facts
- Spot gold
- $4,361.89 an ounce, up 0.4% at 8:23 a.m. in Singapore
- Recent oil move
- Oil lost more than 9% over the previous four days before stabilizing Tuesday
- Federal Reserve action
- Officials unanimously voted last week to raise rates for the first time in three years
- September fund inflows
- About 50 tons flowed into bullion-backed exchange-traded funds
- Silver
- Rose 0.8% to $66.56 an ounce
- Other metals
- Platinum and palladium edged higher
- Upcoming diplomacy
- Donald Trump and Xi Jinping are expected to discuss artificial intelligence, trade and investment
Sources
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