The price of each ounce of gold for immediate delivery rose by 0.8% to $4295.26. This precious metal had reached its lowest level in about 6 weeks during trading on Wednesday.
Decline in Gold Price in Futures Market
The price of each ounce of gold in the U.S. futures market for delivery in December fell by about 1.2% to $4333.90. In this context, oil prices decreased in today's trading and continued their downward trend.
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The Role of Oil Prices and Interest Rates in the Gold Market
Kelvin Wang, a senior market analyst at OANDA, stated that oil prices remain a key factor to watch. If the downward trend in oil prices continues, this could support gold prices at least in the medium term. Until such an event occurs, gold prices are expected to fluctuate within a specific range.
He added that the current increase in gold prices is largely due to technical factors, and the Federal Reserve's hawkish message has already been largely factored into market prices. Gold is typically seen as a hedge against inflation, but high interest rates impact its attractiveness as a non-yielding asset.
The Federal Reserve raised interest rates on Wednesday and indicated the possibility of further increases in the coming months. Kevin Warsh, the head of the U.S. central bank, joined the unanimous decision of Federal Reserve members. This decision effectively confirms the Trump administration's inability to control inflation so far, and policymakers are concerned about its escalation.
According to updated quarterly economic forecasts, 16 out of 18 policymakers expect interest rates to increase by at least 25 basis points at least once more by the end of this year, with only two of them predicting that rates will remain stable thereafter.
In the market for other precious metals, the price of each ounce of silver rose by 1.2% to $63.73. The price of each ounce of platinum increased by 1.7% to $1783.56, and each ounce of palladium rose by 2.2% to $1296.70.
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