Fed Raises Interest Rates Amid Oil Price Surge

The Federal Reserve is poised to raise interest rates for the first time in three years due to soaring energy costs and escalating geopolitical tensions. Markets are pricing in an 86% to 92% probability of a 25 basis point hike at the FOMC meeting scheduled for September 16-17.

Brent crude has surged past $107 per barrel, while West Texas Intermediate is trading around $103, following drone attacks on key Middle Eastern energy infrastructure. The shutdown of Saudi Arabia's East-West pipeline, which handles between 4 and 7 million barrels per day, has further exacerbated the situation.

The impending rate hike will likely strengthen the dollar, making gold more expensive for international buyers and dampening demand. Gold prices have already fallen over 1% to approximately $4,290 per ounce, marking a five-week low.