FX.co ★ Gold Pressured by Hawkish Fed Outlook

Gold traded below $4,300 an ounce on Thursday, extending the pullback from its intraday highs in the previous session after the US Federal Reserve raised interest rates and signaled the likelihood of another increase before year-end. As widely anticipated, the Fed lifted the federal funds rate by 25 basis points to a range of 3.75%–4.00%, its first rate hike in three years.

Fed Chair Kevin Warsh noted that inflation remains elevated, reinforcing concerns after last week’s data showed core US inflation in August rose more than expected.

At the same time, gold found some support from a decline in oil prices, as fears over supply disruptions in the Middle East eased. Saudi Arabia aims to restore roughly half of the capacity of its East–West pipeline within days and bring it back to full operation within six weeks. US Energy Secretary Chris Wright also reported that 18 million barrels of crude and petroleum products had transited the Strait of Hormuz earlier this week.