Gold steadies near $4,350 as oil rises and rate-hike bets lift
Gold held around $4,350 an ounce after two straight sessions of losses. Rising oil prices and inflation concerns strengthened expectations for interest rate hikes, with markets pricing about a 60% chance of a 25-basis-point hike next week.
Gold held around $4,350 an ounce on Wednesday after falling for two straight sessions, with rising oil prices stoking inflation concerns and expectations for interest rate increases. Oil prices kept climbing after US forces destroyed five Iranian crude tankers near Kharg Island, the country’s main oil export hub, in retaliation for attempted missile attacks on a US warship. Investors were also awaiting key US inflation readings this week for more signals on the Federal Reserve’s next policy move. Markets are pricing in about a 60% chance of a 25-basis-point rate hike next week.
Gold is often viewed as an inflation hedge, but higher interest rates can curb demand for the non-yielding metal by making interest-bearing investments more attractive. Gold also posted strong gains in August, supported by increased investment and hedging demand and continued central bank buying, especially from China.