Gold Surges as Fed Rate Hike Boosts Value

Gold prices surged more than 1 percent on Thursday as investors assessed the impact of the Federal Reserve's latest rate hike. The Fed raised rates on Wednesday and signaled further policy tightening, which boosted the value of gold despite its reputation as an inflation hedge. Spot gold was up 1.2 percent to $4,312.05 per ounce at 0848 GMT, after hitting a near six-week low the previous day.

Independent analyst Ross Norman attributed the market's move to investors squaring out positions that had been taken in anticipation of a rate hike. The dollar also eased from its seven-week high, making gold more affordable for holders of other currencies. Oil prices continued their decline as fears of supply disruptions diminished.

Linh Tran, Market Analyst at XS.com, noted that higher interest rates could weaken growth without quickly resolving price pressures. Despite this, the environment remains supportive of demand for gold as a hedge, particularly while geopolitical uncertainty persists. US President Donald Trump expressed hope for an end to the war against Iran, but the conflict escalated with Saudi aircraft pounding Yemen and Houthi fighters launching drones and missiles at Saudi cities.