Gold muted as Fed policy tightening prospects weigh

Gold prices were ‌muted on Thursday, pressured by expectations of further Federal Reserve policy tightening, though a dip in oil prices offered some support.

Spot gold was down 0.1% at $4,281.98 per ounce, as of 0155 ​GMT. US gold futures for December delivery were little changed at $4,317.50.

"Investors are ​currently focused on the Fed’s higher-for-longer stance following last week’s ⁠rate increase, fluctuations in the US dollar and Treasury yields, and Middle East ​developments related to oil and energy supply risks," said Ross Maxwell, chief strategy officer, ​VT Markets.

Oil prices edged lower as Iran said it remained open to diplomacy to end the US-Iran war, though the two ​countries remain far apart on ways to do so.

The US central bank last ​week increased its benchmark interest rate by 25 basis points to 3.75%-4.00%. Mounting inflation pressures and a strengthening ‌economy ⁠appear to be pushing the Fed towards a rate hike on the eve of critical national elections, with traders piling into bets on a second straight policy tightening in late October.

While gold is widely regarded as an inflation hedge, rising ​interest rates tend ​to diminish its ⁠appeal relative to interest-bearing investments.
Source: Reuters