Fed Pause Sends Gold Prices Surging Amid Inflation Data Uncertainty

Gold and silver prices surged on Thursday after the US Federal Reserve left interest rates unchanged. The decision sparked a re-evaluation of monetary policy expectations, with investors shifting their focus to key US inflation data due later in the day.

COMEX gold futures rose $49.50 or 1.23% to $4,085.80 per ounce, while COMEX silver futures increased 1.10% to $58.730 per ounce. The gains came after traders pared expectations of a September rate increase, with the CME Group's FedWatch Tool showing a 57% probability of a hike in September.

Investors are now eagerly awaiting the release of the US Personal Consumption Expenditures (PCE) Price Index for June, which is expected to provide fresh clues on the direction of US interest rates. Higher interest rates typically reduce the appeal of non-yielding assets like gold, but expectations of lower or stable rates tend to support precious metal prices.

Geopolitical risks also remained in focus, with reports of an attack on a US-owned gas storage tanker at Egypt's Mediterranean port of Damietta and renewed tensions between the US and Iran keeping safe-haven demand for precious metals intact. Markets will also monitor monetary policy decisions from the Bank of England and the Bank of Japan later this week.