Gold rises to weekly high as oil prices fall
Gold prices rose to a weekly high due to easing inflation fears and Treasury bond pressures, while investors assess the likelihood of another rate hike.
Translated by Qiyas from الجريدة — Original source
Gold prices rose yesterday to their highest level in a week, as concerns about inflation eased and US Treasury bonds came under pressure due to falling oil prices, while investors weighed the possibility that the Federal Reserve (the US central bank) would raise interest rates again.
Han Tan, chief market analyst at Pipe, said: “Gold rose somewhat as oil prices fell and yields on long-term Treasury bonds retreated from recent highs.”
Oil prices declined as fears about Middle East supply disruptions eased somewhat after US President Donald Trump stated that the United States would not launch an attack on Iran before the midterm congressional elections scheduled for November.
Yields on 10-year US Treasury bonds fell on Wednesday from their highest level in more than two decades.
Alberto Musalem, president of the Federal Reserve Bank of St. Louis, said on Thursday that the Federal Reserve would need to raise interest rates again to bring inflation back to its 2 percent target.
According to CME Group’s FedWatch tool, traders are pricing in a 19 percent probability of a US interest rate hike in October, and an 84 percent probability of a hike of at least 25 basis points in December.
Although gold is typically viewed as a hedge during periods of rising inflation, higher interest rates reduce the appeal of this non-yielding asset.
