Gold Rises on Modest Oil Price Retreat Amid Fed Rate Hike Bets
Gold prices rose 0.8% to $4,326.57 an ounce by midday in Singapore after a two-day decline, as traders weighed the impact of a modest oil price retreat against bets on an imminent interest-rate hike by the Federal Reserve.
The US central bank is expected to raise rates for the first time since 2023, with investors pricing in a 93% chance of a hike. Higher borrowing costs typically hurt gold, which doesn't pay interest, but the 10-year US Treasury yield eased after reaching its highest level in nearly two decades.
Oil prices fell as gains driven by supply disruptions were seen as overdone, easing inflation concerns. However, Christopher Wong, a strategist at Oversea-Chinese Banking Corp., warned that if the Fed keeps the door open to further tightening, gold may be more vulnerable and move lower towards $4,000 an ounce.
Despite the current decline in gold prices, many investors believe bullion will regain momentum once it regains its traditional value as a portfolio hedge. Spot gold rose as much as 1.1% to above $4,340 an ounce, while silver was up 1.5% at $64.60 an ounce.