Gold Surges Amid Sliding Oil Prices and Interest Rate Hike

Gold prices surged along with US Treasuries on Thursday as oil prices continued to slide. The move came after the Federal Reserve raised interest rates by a quarter percentage point, but investors remained focused on inflation concerns.

The price of gold rose as much as 2.8% to $4,380 an ounce, snapping a three-day decline. Treasury yields cooled down following the Fed's decision, which helped lift some pressure off gold. However, elevated yields and a stronger US dollar may continue to cap gold in the near term.

Oil prices slid Thursday on signs that supply disruptions in the Middle East may ease, with Saudi Arabia seeking to partially restore flows along a vital pipeline. The steady rally in crude had reinforced bets on the Fed's September hike, weighing on gold.

Giovanni Staunovo, strategist at UBS Group AG, noted that the Fed signaling rates will remain higher for longer 'remains a near-term headwind for the yellow metal.' However, he also predicted that rising fiscal deficits, higher debt burdens, and an eventual weakening of the US dollar will support gold despite near-term volatility.