Is Gold’s Rally Already Over?
AT A GLANCE
- Spot gold down 0.6% to $4,319.39/oz; US futures down 0.6% to $4,356.30
- Fed’s Musalem says more rate hikes may be needed to tame inflation
- Silver, platinum, palladium all slide
- Houthi advances in Yemen, and UN General Assembly talks add geopolitical noise
- Oil ticks up after four straight losing sessions
A fresh round of hawkish Fed talk is pulling gold lower, even as war risk and inflation worries simmer in the background.
Gold pulled back on Tuesday as traders bet the Fed isn’t done raising rates. With little economic data on the calendar this week, all eyes are on what central bank officials say next.
KEY DETAILS
Spot gold dropped 0.6% to $4,319.39 an ounce, while US futures fell the same amount to $4,356.30. The move comes just days after the Fed hiked rates by a quarter point and hinted at more to come. St. Louis Fed President Alberto Musalem added fuel to the fire, saying the central bank should act sooner rather than later to fight inflation driven by strong demand and a broadening commodity price shock.
MARKET REACTION
The pullback wasn’t limited to gold. Silver lost 1.1% to $65.28, platinum dropped 1.1% to $1,777.29, and palladium slipped 0.8% to $1,290.07. Oil, meanwhile, edged higher for the first time in five sessions as markets watched for signs of US-Iran talks at the UN General Assembly.
WHY IT MATTERS
Higher rates make gold less attractive since it pays no yield. If oil prices climb further, that could reignite inflation fears and pressure gold even more.
Watch for fresh Fed commentary and any oil price swings this week; both could decide gold’s next move.
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Source: Reuters
