Gold Prices Rise

 

Gold Prices Rise as Oil Slump Eases Inflation Concerns, Trump Signals Iran Talks

Gold prices edged higher on Tuesday after crude oil prices fell more than 9% over the previous four trading sessions, easing inflation concerns and reducing expectations for further aggressive interest rate hikes by the Federal Reserve.

A weaker U.S. dollar and renewed optimism surrounding potential diplomatic engagement between the United States and Iran also supported bullion prices, although Federal Reserve officials remain divided over the future path of monetary policy.

As of 09:04 WIB, spot gold (XAU/USD) climbed 0.4% to $4,359.40 per ounce, while Gold Futures gained 0.3% to $4,396.85 per ounce. Silver (XAG/USD) advanced 0.6% to $66.43 per ounce, and platinum (XPT/USD) rose 0.3% to $1,809.03 per ounce. Meanwhile, the U.S. Dollar Index slipped 0.03% to 100.39.

Oil Price Decline Reduces Inflation Pressure

Gold rebounded from Monday’s losses after posting its largest daily decline in a week. The recovery came as oil prices stabilized following a sharp four-session selloff of more than 9%, helping to ease inflationary pressures that had recently weighed on financial markets.

Lower energy prices have also tempered expectations that the Federal Reserve will need to tighten monetary policy further. Gold typically benefits from lower interest rate expectations because the precious metal does not generate yield.

Market sentiment was further supported by renewed diplomatic developments involving the United States and Iran. U.S. President Donald Trump is scheduled to address the United Nations General Assembly in New York on Tuesday and has signaled openness to meeting Iranian President Masoud Pezeshkian on the sidelines of the event.

The renewed diplomatic focus follows months of geopolitical tensions and disruptions to energy supplies in the Middle East. Any improvement in oil supply prospects could further alleviate inflation concerns and support investor sentiment.

Fed Officials Send Mixed Interest Rate Signals

Investors are also closely monitoring comments from Federal Reserve officials after the central bank unanimously approved a 25-basis-point interest rate increase last week, marking its first rate hike in three years.

Chicago Federal Reserve President Austan Goolsbee stated that policymakers cannot simply ignore recurring and persistent supply shocks, emphasizing the need for a response even if it results in economic challenges.

Meanwhile, St. Louis Federal Reserve President Alberto Musalem said additional rate hikes may still be necessary to bring inflation back to the Fed’s target level, which has remained unmet for more than five years.

Gold prices came under pressure on Monday as markets priced in the possibility of further Fed tightening later this year, while hawkish signals from other major central banks helped strengthen the U.S. dollar.

Despite near-term headwinds, investment demand for gold remains robust. Approximately 50 metric tons of gold flowed into physically backed gold exchange-traded funds (ETFs) during September, putting the sector on track to record a third consecutive month of inflows and highlighting continued investor interest in the precious metal.

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Goldman Gold Outlook

What Does the Fed's Rate Hike Mean for Gold Prices in 2027? Goldman Sachs Explains

Goldman Sachs has maintained its bullish outlook on gold, telling investors in a note on Friday that the Federal Reserve’s recent interest rate hike should slow, rather than derail, the precious metal’s long-term rally.

The bank’s analyst, Lina Thomas, reiterated Goldman’s forecast for gold prices to reach $5,400 per troy ounce by the end of 2027, despite the Fed’s rate increase this week and growing expectations among economists for another hike in October.

While higher interest rates are expected to continue weighing on gold through exchange-traded fund (ETF) demand in the near term, Thomas said the Fed is still likely to deliver three rate cuts between September 2027 and March 2028, leaving the terminal interest rate outlook unchanged.

As a result, Goldman believes tighter monetary policy will primarily affect the pace of gold’s appreciation rather than its long-term destination.

“We expect tighter monetary policy to be reflected more through a slower pace of near-term appreciation rather than a lower terminal gold price,” Thomas said.

Goldman lowered its year-end fair value estimate for gold to $4,650 per ounce from $4,900 per ounce, although the revised target remains above the current spot price of around $4,350 per ounce. The bank noted that much of the impact from tighter monetary policy has already been priced into ETF demand.

Thomas added that Goldman continues to expect gold to “grind higher in the near term,” with stronger-than-expected central bank purchases helping offset the remaining pressure from elevated interest rates.

Central bank buying remains the key structural driver behind Goldman’s bullish gold outlook. The bank estimates that official-sector purchases account for nearly all of the projected 23% increase in gold prices through the end of 2027. Current purchases are running at approximately 91 metric tons per month, significantly above the pre-2022 average of 17 tons per month.

According to Thomas, risks remain skewed to the upside, supported by resilient demand for gold call options as a hedge against macroeconomic policy uncertainty. However, she also cautioned that price volatility could increase in both directions.

“On the other hand, a much more hawkish Fed path could trigger a sharper-than-usual correction,” Thomas warned.

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Gold Rebounds Higher

Gold Rebounds Above $4,300 After Fed Delivers First Rate Hike Since 2023

Gold prices climbed on Thursday after the Federal Reserve raised interest rates for the first time since 2023, a move that had been widely anticipated by financial markets.

At 4:56 p.m., spot gold gained 1.2% to $4,314.57 per ounce, while gold futures slipped 0.8% to $4,354.09 per ounce. The Fed unanimously approved a quarter-percentage-point increase in the federal funds rate on Wednesday, marking a significant shift in monetary policy.

The central bank’s latest projections signaled a more hawkish outlook. The median forecast for the policy rate at the end of 2026 rose to 4.1% from 3.8%, indicating support for additional rate hikes in the coming quarters. Markets interpreted the guidance as a sign that policymakers remain focused on containing inflation.

Following the decision, U.S. Treasury yields declined across the curve, while the U.S. dollar strengthened.

Higher interest rates generally weigh on gold because the precious metal does not generate interest income. A stronger dollar can also reduce demand by making gold more expensive for buyers using other currencies.

Technical Outlook Remains Under Pressure

Tony Sycamore, Senior Market Analyst at IG, said expectations for another Federal Reserve rate hike later this year, along with an additional 50 basis points of tightening in the first half of 2027, have intensified the headwinds facing gold.

From a technical perspective, Sycamore noted that gold must reclaim its 200-day moving average near $4,539 to signal that the correction from the recent peak of $4,697 has ended and that the broader uptrend has resumed.

Until then, he expects the current decline to extend toward the $4,200 level, with the next major support zone located around $4,000 per ounce.

Fed Chair Kevin Warsh reinforced the central bank’s inflation concerns during the post-meeting press conference. He stated that too many categories of goods and services continue to record annual price increases above 3% over both six-month and twelve-month periods, underscoring the Fed’s commitment to maintaining a restrictive policy stance.

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