Gold Rises Over 1% Despite Fed Rate Hike on Tightening Signals

Gold prices climbed by over 1.0% on Thursday, rising to $4,310.49 per troy ounce in spot trading by 0549 GMT—marking a 1.1% gain and recovering from a six-week low recorded the previous day, Wednesday.

U.S. December gold futures fell approximately 1.0% to $4,348.70, diverging from the upward movement in spot prices. Oil prices declined, extending losses from the prior session after reports indicated Saudi Arabia was offering additional crude shipments via Oman—a development that eased concerns over potential supply disruptions.

Market Analysis and Technical Drivers

Kelvin Wong, Senior Market Analyst at OANDA, stated: “Oil prices remain a key factor to watch. If oil continues to fall, it could support higher gold prices—at least on a medium-term basis. Until then, I expect gold to trade within a range.” He added that the current gold rally is driven significantly by technical factors, as markets have priced in the U.S. Federal Reserve’s signals of further monetary tightening.

Although gold serves as an inflation hedge, elevated interest rates diminish its appeal relative to yield-bearing assets. The U.S. Federal Reserve raised interest rates on Wednesday and signaled additional hikes in the coming months. New Federal Reserve Chair Kevin Warsh joined the unanimous decision—an outcome interpreted as an implicit acknowledgment that the Trump administration has so far failed to rein in inflation, a trend policymakers fear may worsen.

Monetary Policy Outlook Elsewhere

The Bank of England appears poised to hold interest rates steady on Thursday; however, investors are closely monitoring for any indication that surging energy prices might prompt it to follow the Federal Reserve’s tightening path.

Regional Developments and Other Precious Metals

In the Middle East, Houthi forces reported Saudi airstrikes on Yemen, as the Iran-aligned group consolidated gains following rapid territorial advances.

Among other precious metals, spot silver rose 1.4% to $63.83 per ounce. Platinum increased 1.6% to $1,780.55, and palladium jumped 2.0% to $1,295.00.