Gold rose to around $4,360 an ounce amid a sharp decline in oil prices, which eased concerns about inflation and the likelihood of further rate hikes by the US Federal Reserve. Oil lost more than 9% over the previous four trading sessions, Bloomberg reports, writes UNN.
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The spot price of gold rose 0.4% to $4,361.89 an ounce. The previous day, the precious metal recorded its biggest weekly decline, but later resumed its rise.
Oil stabilized on Tuesday after falling more than 9% over four days. Prices declined amid easing concerns about supplies from the Middle East and renewed diplomatic efforts to end the war between the United States and Iran.
Oil’s decline supported gold
Cheaper oil reduces inflationary pressure and, consequently, the need for further interest-rate hikes by the Federal Reserve. Lower rates are generally favorable for gold.
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Last week, the Federal Reserve raised its interest rate for the first time in three years. At the same time, Fed officials continue to signal that further hikes may be needed to bring inflation back to its target level.
Investor interest in gold remains high: in September, gold-backed exchange-traded funds attracted around 50 metric tons of the metal. This marked the third consecutive month of net inflows.
Silver also rose 0.8% to $66.56 an ounce, while platinum and palladium posted slight gains.