Gold Touches $4,100 After Fed Holds Rates, Climbing Despite Hike Risk
Forecast Trend Report by Period
Gold rose after the Federal Reserve left interest rates unchanged, briefly touching $4,100 an ounce.
Spot gold climbed as much as 0.8% on July 29 to reach $4,100 an ounce, Bloomberg reported. The metal had already advanced 0.9% the previous day.
The Fed voted 9-3 at its July 29 Federal Open Market Committee meeting to hold its benchmark rate steady. Even so, the possibility of another rate increase remains after three officials dissented as higher energy prices tied to the Middle East war added to inflation pressure.
Fed Chair Kevin Warsh emphasized that holding rates steady did not mean the central bank had stopped responding with monetary policy. If inflation remains elevated over the forecast period, rates could be part of the solution, he said, while adding that they would not be the only policy tool.
Gold has fallen more than 20% over the past five months since the war between the US and Iran began. Conflict in the Middle East pushed up energy prices and fueled inflation concerns, while the prospect of higher rates for longer weighed on non-yielding bullion.
Still, bargain hunting has emerged since late June, helping gold hold support around $4,000 an ounce.
Nicky Shiels, head of research and metals strategy at MKS PAMP, said the Fed's decision to stand pat could spark a relief rally in previously unloved assets such as precious metals and bonds. She added that investors are increasingly likely to return to gold and identified $4,200 as the key level for the next move.
Rising tensions in the Middle East are also supporting the haven asset. President Donald Trump recently threatened retaliation after Iran attacked a US military base in Jordan, and the US resumed airstrikes on Iran. The US and Saudi Arabia had earlier struck facilities used by pro-Iran armed groups in Iraq.
As of 7:50 a.m. in Singapore, spot gold was up 0.6% at $4,091.40 an ounce. Silver rose 1.1% to $58.37, while platinum and palladium also gained. The Bloomberg Dollar Spot Index fell 0.1% after dropping 0.3% a day earlier.
