Gold Rises as Traders Weigh Oil Decline Against Near-Certain US Fed Rate Hike

The price of gold has risen as traders weigh the decline in oil prices against the likelihood of an interest rate hike by the US Federal Reserve later this week. Bullion rose as much as 1.1 per cent to above $4,340 an ounce.

Oil fell after a two-day gain, with prices easing some inflationary concerns. However, traders are still pricing in a 93 per cent chance of the Fed hiking rates following a hotter-than-expected inflation print last week.

The 10-year US Treasury yield eased after rising to its highest level in almost two decades, while the two-year US Treasury yield also edged lower, lifting some pressure on bullion. Investor expectations are that the central bank will raise interest rates for the first time since 2023.

Christopher Wong, a strategist at OCBC Bank, noted that 'the main uncertainty is less about the hike itself, and more about what comes after.' He added that if the Fed keeps the door open to further tightening, gold may be more vulnerable and move lower towards $4,000 an ounce if key support at $4,250 is broken.