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Source: Newsmaker.id
Gold prices surged more than 2% in Thursday's trading (Sept. 17), rebounding after hitting a nearly six-week low in the previous session. Spot gold rose 2.3% to US$4,360.36 per troy ounce at 1:45 PM New York time (00:45 WIB, Friday, Sept. 18). Meanwhile, U.S. gold futures for December delivery closed 0.3% higher at US$4,399.70 per troy ounce.
Gold's gains were supported by the U.S. dollar retreating from a seven-week high and a decline in 10-year Treasury yields. Oil prices also fell for a second day, hitting a one-week low as concerns over supply disruptions eased. David Meger, Director of Metals Trading at High Ridge Futures, noted that lower energy prices helped alleviate inflationary pressure, which had previously weighed on gold due to expectations of monetary tightening.
Nevertheless, the outlook for U.S. interest rates remains a challenge for the precious metal. The Federal Reserve raised rates on Wednesday and signaled the possibility of further tightening to curb inflation. According to the CME FedWatch tool, the probability of a rate hike at the October meeting stands at 51%, up from nearly 44% the previous day. High interest rates can limit gold's appeal by increasing the relative returns on interest-bearing assets.
Looking at the longer term, UBS believes that a widening fiscal deficit, a growing debt burden, and potential dollar weakness could support gold. The bank also anticipates that the Fed will loosen policy again next year, although that projection remains subject to uncertainty. Market attention is also focused on the Bank of Japan, which is expected to raise interest rates on Friday, following the Bank of England's decision to hold rates steady on Thursday.
The rally extended to other precious metals as well. Spot silver surged 4.2% to US$65.60 per troy ounce, marking the largest percentage gain among the reported metals. Platinum rose 1.8% to US$1,783.69, while palladium climbed 1.6% to US$1,289.45 per troy ounce.
According to Newsmaker's analysis, the rebound in gold indicates that a weaker dollar and declining yields were temporarily able to offset pressure from Federal Reserve interest rate hikes. Falling oil prices also helped by easing concerns over energy-driven inflation, though the increased probability of tightening in October suggests that risks remain. Gold's gains could continue if the dollar and yields keep weakening; conversely, a surge in oil prices—which would reinforce expectations of rate hikes—could cap the rally and trigger a correction.
Source: Newsmaker.id