Gold Rises as Oil and Bond Yields Lose Momentum

Gold climbed back above $4,300 an ounce on Wednesday, ending a two-session decline as gains in oil prices and bond yields lost momentum ahead of the latest US Federal Reserve policy decision. Oil prices pulled back from multi-month highs after a surprise increase in US crude inventories, although ongoing supply disruptions in the Middle East continued to support prices. Meanwhile, global bond yields steadied after their recent rise as investors turned their attention to several major central bank decisions this week. The Fed is widely expected to raise interest rates by 25 basis points, marking its first hike in around three years as policymakers work to curb inflationary pressures. Markets will also focus on signals regarding another potential increase later this year, with expectations building for a move in October or December. The Bank of Japan is likewise expected to raise borrowing costs this week, while the Bank of England is anticipated to leave rates unchanged.

Gold remained below $4,300 an ounce on Wednesday, hovering near its lowest level in almost six weeks as investors cautiously awaited the latest US Federal Reserve policy decision. The central bank is widely expected to raise interest rates by 25 basis points, marking its first increase in around three years as policymakers seek to contain inflationary pressures. Traders will also look for guidance on another potential rate hike later this year, with expectations growing for a move in October or December. The Bank of Japan is also expected to raise borrowing costs this week, while the Bank of England is likely to keep policy unchanged. Meanwhile, gold prices faced additional pressure from surging energy costs that are fueling inflation concerns amid widening supply disruptions in the Middle East. Higher bond yields also weighed on non-yielding metals, with the US 10-year Treasury yield climbing to its highest level since 2007.

Gold prices traded around $4,290 an ounce on Tuesday, their lowest level since early August, pressured by a stronger US dollar and elevated Treasury yields amid rising crude oil prices and expectations of a Federal Reserve interest rate hike this week. Oil prices remained elevated and well above $100 a barrel after attacks on Saudi Arabia’s energy infrastructure forced the East-West Pipeline offline, heightening concerns over global supply. Geopolitical risks also intensified amid continued disagreements between the US and Iran over the Strait of Hormuz, alongside an increased Houthi presence near the Strait of Bab el-Mandeb. Markets are pricing in a 25-basis-point rate hike by the Fed on Wednesday, with investors closely watching policymakers’ guidance for signs of further tightening. The Bank of Japan is also expected to raise interest rates on Friday, as elevated energy prices and persistent tensions in the Middle East continue to complicate the global inflation outlook.