Oil Price Slump Boosts Gold as Inflation Fears Ease
The price of gold rose by as much as 2.8% to $4,380 an ounce after three consecutive days of losses, following a slump in crude oil prices that eased concerns about inflation.
Oil slid from its recent highs on signs that supply disruptions in West Asia are set to ease, with Saudi Arabia seeking to partially restore flows along a vital pipeline. The decrease in oil prices helped alleviate pressure on gold, which typically performs worse when bond yields are high because it doesn't pay interest.
Treasury yields cooled after spiking following the Federal Reserve's decision to raise rates by a quarter percentage point, lifting some pressure off gold. Christopher Wong, strategist at Oversea-Chinese Banking Corp., said 'yields are correcting from the overreaction' in the previous session, which has helped support gold.
Investors have continued to flock to bullion via gold-backed exchange-traded funds (ETFs), with ETFs tracked by Bloomberg seeing inflows for eight consecutive days.