Gold Tries to Hold Ground Amid Rising Oil Prices and Hawkish Fed Bets
Gold prices are on the rise, climbing towards $4,325, as investors react to rising oil prices and await the Federal Reserve's rate decision. The precious metal is still down 3% in September due to concerns over inflation and geopolitical uncertainty.
The rally in oil prices has pushed above $109 this week, fueled by fears of supply disruptions in the Middle East. This surge in energy costs has added to inflationary worries, while rising Treasury yields have become a significant factor for gold investors. The yield on 10-year Treasuries hit its highest level in 19 years at 5%, making non-yielding assets like gold less attractive.
The market is pricing in a 92% probability of a 25-basis-point rate hike by the Fed, which could signal further tightening ahead. A dovish tone from policymakers or a failure to hike rates could lead to higher yields and weigh on gold prices.