Gold Rallies as Oil Prices Drop and Fed Hikes Interest Rates

Gold prices climbed on Thursday after three consecutive days of losses, as investors weighed the impact of the Federal Reserve's interest rate hike. The yellow metal rose 1.9% to $4,346.62 per ounce, while gold futures slipped 0.1% to $4,385.17 per ounce.

The Fed's decision to raise rates by 25 basis points to a range of 3.75%-4.00% was in line with market expectations and marked the first hike in over three years. The higher rate environment typically weighs on gold prices, as it strengthens the dollar and makes bullion more expensive for foreign buyers.

The precious metal market also digested hawkish indicators from the Fed's updated Summary of Economic Projections and Chairman Kevin Warsh's press conference. The new dot plot showed at least 12 FOMC members expecting one more rate hike this year, while Warsh noted a lack of meaningful improvement in underlying U.S. inflation trends.

The oil market also contributed to gold's gains, as prices dipped for the second consecutive day amid easing supply disruption fears and diplomatic progress between the U.S. and Iran. The shutdown of the East-West Pipeline in Saudi Arabia last Friday had driven up disruption jitters, but reports suggest it will start operating at half capacity within days.