Gold prices rebounded on Wednesday after two consecutive sessions of losses, moving back toward $4,350 an ounce as investors prepared for the Federal Reserve’s latest policy decision.
Persistent inflation concerns, elevated oil prices and high Treasury yields continued to shape market expectations. Traders were pricing in roughly a 92% chance of a Federal Reserve rate hike.
At 02:31 ET, XAU/USD rose 0.8% to $4,326.44 an ounce, while gold futures gained 0.8% to $4,366.50.
Silver also moved higher, with XAG/USD gaining 1.4% to $64.59, while platinum rose 0.7% to $1,792.43. The US Dollar Index remained almost unchanged near 99.57.
Gold Recovers After September Selloff
Gold has fallen more than 3% in September after trading above $4,700 an ounce in late August.
The recent decline has largely reflected shifting expectations for US monetary policy as traders reassessed the outlook for interest rates.
Wednesday’s recovery pushed spot gold back above $4,300. However, prices remain well below the highs reached toward the end of August.
Oil Prices Add to Inflation Concerns
High energy prices remain an important source of inflationary pressure.
Oil prices steadied after two consecutive sessions of gains, while uncertainty surrounding the shutdown of Saudi Arabia’s East-West pipeline continued to affect energy markets.
The pipeline was attacked last week and had been transporting millions of barrels of oil per day as an alternative route around disruptions in the Strait of Hormuz.
Saudi Arabia has not yet provided a clear timeline for when the pipeline will resume operations.
Saudi Aramco has also delayed some shipments to European customers, increasing concerns over global oil supply.
Treasury Yields Rise to Multi-Year Highs
Higher energy prices have also contributed to upward pressure on bond yields.
The benchmark 10-year US Treasury yield briefly climbed to 5.04%, its highest level since 2007.
The move forms part of a broader global bond selloff driven by stronger capital investment and rising energy costs.
Both factors have increased concerns that inflation could remain elevated for longer than previously expected.
Higher Treasury yields are generally negative for gold because bullion does not generate interest. As bond yields rise, income-producing assets can become more attractive to investors.
Fed Rate Decision Takes Center Stage
Markets are now pricing in approximately a 92% probability that the Federal Reserve will raise interest rates.
If confirmed, it would mark the central bank’s first rate increase since 2023.
However, the market reaction may also depend heavily on the Fed’s guidance.
If the central bank leaves rates unchanged, or if Chair Kevin Warsh signals uncertainty over future rate increases, investors could demand higher yields on longer-term bonds to compensate for persistent inflation risks.
Key Technical Levels for Gold
Tony Sycamore, senior market analyst at IG, said gold ended the previous session slightly lower near $4,293.
He pointed to rising energy prices, higher bond yields, a firmer US dollar and cautious positioning ahead of the Federal Reserve decision as key factors weighing on the metal.
According to Sycamore, gold would need to recover above its 200-day moving average near $4,539 to confirm that the recent pullback from the $4,697 high has ended.
Until then, the metal could remain vulnerable to a deeper decline toward support around $4,200.
Gold’s Longer-Term Outlook Remains Supported
Despite recent weakness, gold continues to trade well above the roughly $4,000 level seen in July.
Many investors also continue to view gold as an important long-term portfolio hedge, particularly during periods of persistent inflation, geopolitical uncertainty and financial-market volatility.
The Federal Reserve’s latest decision could now determine whether gold extends its recovery or faces renewed selling pressure.
