Gold ticks up from near six-week low as investors weigh Fed outlook

Synopsis

On Thursday, gold prices slightly increased after previously touching a six-week low, responding to the U.S. Federal Reserve’s hike in interest rates and hints of more tightening to come. This strategy targets inflation fears that policymakers are increasingly alert to. In a related note, the Bank of England is projected to keep rates unchanged today, with other metals like silver, platinum, and palladium also showing positive trends.

Gold prices nudged higher on Thursday after hitting a near six-week low in the previous session, as investors assessed the U.S. Federal Reserve's interest-rate increase and its signal that further tightening may follow.

FUNDAMENTALS

Spot gold was up 0.5% at $4,283.45 per ounce, as of 0015 GMT, after hitting its lowest level since August 7 on Wednesday.

U.S. gold futures for December delivery were down 1.5% at $4,321.80.

The Fed raised interest rates on Wednesday and flagged more hikes in the coming months, with new U.S. central bank chief Kevin Warsh joining a unanimous decision that effectively acknowledges the Trump administration's inability so far to control inflation that policymakers worry could worsen.

"There's been a pretty wide-ranging set of data, including the labor markets, that the economy has strengthened," Warsh told reporters in listing the reasons that prompted him to support a rate hike after advocating that rates should remain on hold at the Fed's July 28-29 meeting.

Rising interest rates tend to pressure gold by increasing the appeal of interest-bearing assets.

Data showed U.S. retail sales rebounded sharply in August as households boosted purchases of a range of goods while also spending more at restaurants and bars, reinforcing the economy's resilience even as consumers grow more anxious about high inflation.

The Bank of England looks set to keep interest rates on hold on Thursday but investors are watching for any hint that surging energy prices could force it to follow the Fed's example.

Elsewhere, Saudi warplanes pounded Yemen, the Houthis said, as the Iran-backed fighters solidified their gains after a lightning advance that has extended Tehran's reach in the Middle East war and further disrupted global oil supplies.

Spot silver rose 0.6% at $63.35, platinum gained 0.8% to $1,765.65 and palladium climbed 1.4% to $1,286.95.

DATA/EVENTS (GMT)

0900 EU HICP Final MM, YY Aug

1100 UK BOE Bank Rate Sep

1230 US Housing Starts Number Aug

1230 US Initial Jobless Clm 12 Sep, w/e

1230 US Philly Fed Business Indx Sep

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