Gold Stabilizes Amid Persistent Inflation and Elevated Interest Rates

Gold prices remained steady as investors weighed the risk of persistent inflation and the path for interest rates after the US Federal Reserve's first hike since 2023. The Fed raised interest rates by a quarter percentage point at their Sept 15 to 16 meeting, aiming to cool inflation that has not fallen below its 2 per cent target in more than five years.

Minneapolis Fed President Neel Kashkari stated that inflation remains too high and pressures have broadened beyond the oil-price shock of the Iran war. 'The inflation that the American people are feeling every day is much beyond just oil prices, it’s in all aspects of the economy,' he said.

Chicago Fed President Austan Goolsbee and New York Fed President John Williams are also due to speak publicly this week, providing further insight into the Fed's intentions. Oil prices steadied as traders tracked supply risks in the Middle East, with President Donald Trump suggesting a possible meeting with his Iranian counterpart on the sidelines of the UN General Assembly.

As interest rates remain elevated, gold is likely to trade closely off movements in oil prices and the broader inflation outlook. Analyst Justin Lin noted that 'in this lull, gold will likely trade more closely off movements in oil prices and the broader inflation outlook.'