Gold Prices Surge Amid Oil Price Volatility and Rate Hike Fears
Gold prices surged on pace for a weekly gain as oil prices dipped, but investors remain cautious amid concerns over global interest rates. Spot gold has inched up 0.4% to $4,356.83 an ounce, while the spot gold price pared gains on Friday after oil prices erased some earlier losses.
The metal recovered more than 2% on Thursday after touching a near six-week low on Wednesday. Traders have been worried that energy-driven inflationary pressures will fuel a monetary policy tightening cycle around the world, which can weigh on non-yielding assets like gold.
Reports emerged that Saudi Aramco informed at least two oil refining customers in Europe that they will receive no crude oil next month following an attack on the kingdom’s main east-west pipeline to the Red Sea. The report comes amid fighting between Saudi Arabia and Yemen's Iran-backed Houthis, which has sparked fears around oil supplies.
The Bank of Japan became the latest central bank to raise interest rates on Friday, citing concerns that inflation was coming increasingly close to crossing its 2% annual target. Analysts at ING flagged 'upside risks' to the US dollar after a hawkish message from the Fed gave 'the green light to markets to fully price in a hike in October if data and energy prices suggest so.'