Gold edged higher Tuesday as a fifth straight day of falling oil prices offset pressure from a dollar sitting near an eight-week high. The move follows last week's Federal Reserve rate hike, while easing Middle East supply fears dragged crude lower for a fifth session.
Gold prices eked out a slight gain on Tuesday, as a slide in oil for a fifth straight session helped offset a dollar pegged at a nearly eight-week high. Spot gold inched up 0.3% to settle at $4,358.58 an ounce, while gold futures added 0.3% as well to settle at $4,396.20 an ounce.
Fed hike keeps the dollar bid
The Federal Open Market Committee unanimously voted to raise the federal funds rate to 3.75%-4.00% from 3.50%-3.75% last Wednesday. Its updated Summary of Economic Projections showed at least 12 FOMC members see one more rate hike this year, and Chair Kevin Warsh struck a hawkish tone in his post-decision press conference.
Higher interest rate environments tend to weigh on non-yielding assets such as gold and strengthen the dollar, which can make bullion more expensive for foreign buyers. The greenback has added nearly 1% since the Fed's hike.
According to David Morrison, senior market analyst at Trade Nation: "the worst of the selling is over", though he noted gold dropped to $4,235 last Wednesday evening right after the rate decision, having been within a few dollars of $4,700 a month earlier — its highest level since mid-May.
Boston Fed President Susan Collins reaffirmed her support for the hike, saying recent economic indicators pointed to an increased likelihood that inflation stays notably above 2% following more than five years of elevated costs. Richmond Fed President Tom Barkin also backed the move, saying risks to inflation currently outweigh risks to maximum employment.
Oil's five-day slide cushions gold
Crude benchmarks have fallen for a fifth straight session amid easing supply-disruption fears and hopes of diplomatic progress in the Middle East. Traders took heart from Saudi Arabia's move to offset the closure of a pipeline damaged amid its conflict with Iran-backed Houthis in Yemen.
Hopes for a meeting between President Donald Trump and Iran's delegation at this week's United Nations General Assembly have also supported sentiment. Trump said at a UN speech that he believes a deal between Washington and Tehran would come after November's US midterm elections.
Brent crude futures, the global benchmark, slipped 1.8% to settle at $98.56 a barrel on Tuesday.
Source: Commodities & Futures News
Trading involves risk.
Risk Disclaimer
