Gold Surges as US Fed Keeps Interest Rates Unchanged Amid Inflation Fears

Gold prices surged on Thursday after the US Federal Reserve decided to keep interest rates unchanged. Despite rising inflationary pressures, particularly in the Middle East due to the ongoing war, gold rose as much as 0.8% to touch $4,100 an ounce.

The Fed's decision was not a unanimous one, with nine members voting in favour of keeping rates steady and three dissenting voices. However, Fed chairman Kevin Warsh clarified that this move does not signify inertia at the central bank.

Warsh noted that if inflation continues to be elevated, interest rates could be part of the solution, but emphasized it's not a standalone measure. Gold has been under pressure since the US-Iran war began over five months ago, with high energy prices contributing to inflationary pressures and increasing the likelihood of higher rates for longer.

Despite this, gold has managed to hold near the $4,000 an ounce support level since late June, thanks in part to a wave of dip-buying. MKS PAMP's Nicky Shiels expects relief rallies for 'overly shorted or disliked asset classes like precious metals and bonds' following the Fed's decision.