Gold and silver prices improved on Thursday due to a slowdown in the rise of oil prices. Gold prices increased by 1.1% to $4,308.80 per ounce, recovering from previous losses. Additionally, silver rose by 1.2% to $63.97 per ounce, showing an increase of about 53% compared to last year.
Factors Influencing the Gold and Silver Market
The improvement in precious metal prices was linked to reports that Saudi Arabia is attempting to restore about half of its East-West oil pipeline capacity in the coming days and return this route to normal within six weeks. This news helped lower oil prices and boosted positive sentiment in the market.
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Positive sentiment in the market was also related to statements from Chris Wright, the U.S. Secretary of Energy, who stated that 18 million barrels of crude oil and petroleum products passed through the Strait of Hormuz earlier in the week. These factors helped reduce concerns about inflationary pressures from energy.
Challenges Facing Precious Metals
However, the increase in precious metal prices remained limited as the U.S. Federal Reserve raised interest rates and announced the possibility of another increase before the end of the year. On Wednesday, the Federal Reserve raised the target range for the federal funds rate by 25 basis points to 3.75% to 4%, marking the first rate increase in three years.
Federal Reserve Chair Jerome Powell stated that inflation remains at a high level, and data released last week showed that core inflation in the U.S. rose more than expected in August. Rising interest rates typically put more pressure on non-yielding assets like gold and silver, increasing the opportunity cost of holding these metals.
As a result, the gold and silver market faces multiple challenges. While the decrease in inflationary pressures from oil has helped increase the prices of these metals, concerns about rising interest rates and their impact on financial markets remain at the forefront of investors' attention. However, demand for gold and silver as safe-haven assets may continue to rise over time.
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