Gold rose after the Fed's decision to keep interest rates unchanged
Kyiv • UNN
Gold prices rose by 0.8% after the Fed left rates unchanged. Tensions in the Middle East exacerbate inflation risks.
Gold prices rose after the U.S. Federal Reserve kept interest rates at their previous level, despite increased inflation risks due to the situation in the Middle East. Bloomberg reports this, writes UNN.
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The price of gold rose by 0.8% and exceeded $4,100 per ounce after a 0.9% gain the previous day. The Federal Reserve voted 9 to 3 to keep rates unchanged, although divisions among the regulator's members indicate growing concerns about a resurgence of inflationary pressure.
Fed Chairman Kevin Warsh emphasized that the decision to keep rates unchanged does not mean the regulator is inactive.
If inflation continues to be elevated over the forecast period, interest rates could very well be part of that decision, but I would not say that is happening separately
Tensions in the Middle East affect markets
Bloomberg notes that since the start of the war between the U.S. and Iran more than five months ago, gold has fallen by more than 20%. High energy prices sustain inflationary pressure and increase the likelihood of prolonged high interest rates. At the same time, since the end of June, the precious metal has held near the support level of $4,000 per ounce due to increased buying activity.
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An additional factor of uncertainty remains the escalation in the Middle East. U.S. President Donald Trump announced his intention to strike in response to Iran's recent attack on an American military base in Jordan. The U.S. and Saudi Arabia also struck Tehran-backed groups in Iraq after reports of intercepting drones heading toward Saudi oil facilities.