Gold prices rose during trading on Wednesday, September 16, amid anticipation of the US Federal Reserve's interest rate decision later in the day, with expectations of an increase.
In trading, gold futures rose by about 0.8% to $4,368.70 an ounce, while the spot price of the precious metal climbed 0.7% to $4,324.36 an ounce. Gold prices had previously hit their lowest level in over a month.
The CME Group’s FedWatch tool indicates that traders currently expect a 92.4% probability of the US Federal Reserve raising interest rates by at least 25 basis points later today.
A market analyst at trading platform Naga.com said in a note quoted by Reuters: “A hawkish stance from the Federal Reserve could lead to further declines in gold prices, while any dovish statements could ease bets on an interest rate hike and help the metal recover.”
Gold is often seen as a hedge against inflation, but rising interest rates increase the opportunity cost of holding the non-yielding precious metal.
The dollar held onto its recent gains, and oil prices remained above $100 a barrel. A stronger dollar makes gold, which is priced in the US currency, more expensive for holders of other currencies, while higher oil prices put downward pressure on prices.
On the geopolitical front, Saudi Arabia issued security warnings in multiple areas, including Mecca and Jeddah, the kingdom’s second-largest city, following a week of attacks by pro-Iranian fighters that further entangled it in the Middle East conflict.
