Gold Rises 1.2% As Softer Dollar And Easing Oil Prices Lend Support

💰 Gold climbed more than 1 percent on Thursday as a softer dollar and easing oil prices lent support, while investors assessed the Federal Reserve's latest rate hike and prospects for further policy tightening. Spot gold was up 1.2 percent at $4,312.05 per ounce, as of 0848 GMT, after hitting a near six-week low on Wednesday. US gold futures for December delivery were down 0.8 percent to $4,351.

📊 "I suspect the market may have gotten itself over positioned on the expectation of a rate hike, as the likelihood grew. And now that it's happened, those positions are being squared out," said independent analyst Ross Norman. The post-rate-hike rally suggests that gold markets had already priced in the Fed's tightening decision, and the actual announcement triggered position unwinding rather than further selling — a classic "buy the rumour, sell the news" dynamic.

💵 Dollar Eases, Oil Falls: Dual Support For Gold

Meanwhile, the dollar eased from a seven-week high, making greenback-priced bullion more affordable for holders of other currencies, while oil prices extended their fall on diminishing fears of supply disruptions. The dollar's retreat from its seven-week high provides immediate relief for gold pricing — since gold is denominated in dollars, a weaker dollar makes gold cheaper for non-US investors, boosting demand. The oil price decline, driven by easing Middle East supply disruption fears following Saudi Arabia's Oman rerouting, further supports gold by reducing inflation expectations that would otherwise pressure the Fed toward even tighter policy.

• 💰 Spot gold: $4,312.05/oz (up 1.2%)
• 💰 US gold futures (Dec): $4,351 (down 0.8%)
• 💵 Dollar: Eased from seven-week high
• ⛽ Oil prices: Extended fall
• 📜 Fed action: Raised rates Wednesday, flagged more hikes
• 🌏 Geopolitical: Trump hopes Iran war ending; Saudi-Yemen escalation continues

📜 Fed Rate Hike: Already Priced In

The Fed raised rates on Wednesday and flagged more hikes in the coming months, with new chief Kevin Warsh joining a unanimous decision that effectively acknowledges the Trump administration's inability so far to control inflation that policymakers worry could worsen. Although gold is considered an inflation hedge, a high interest rate environment reduces its appeal by boosting the attractiveness of interest-bearing assets. The tension between gold's inflation-hedge role (bullish) and the opportunity cost of holding non-yielding assets in a high-rate environment (bearish) creates the complex pricing dynamic that gold markets are currently navigating.

🌏 Global Central Bank Decisions: BoE And BoJ

The Bank of England looks set to keep rates on hold on Thursday, while the Bank of Japan could raise interest rates to a 31-year high on Friday. The divergent central bank actions — Fed hiking, BoE holding, BoJ potentially raising — create a complex cross-current for gold pricing. The BoE's hold would support gold by maintaining the rate differential that makes non-yielding assets relatively more attractive in the UK context. The BoJ's potential rate hike, if it occurs, would represent a significant shift in Japanese monetary policy that could affect global capital flows.

📜 Analyst: Fed Tightening Into Supply-Driven Inflation

"The Fed is tightening policy at a time when inflation is being driven primarily by energy prices and supply shocks, meaning higher interest rates could weaken growth without quickly resolving all price pressures," said Linh Tran, Market Analyst at XS.com. "This environment remains supportive of demand for gold as a hedge, particularly while geopolitical uncertainty persists." The analyst's observation captures a key structural dynamic: when inflation is driven by supply-side factors (energy prices, supply chain disruptions) rather than demand-side factors (consumer spending, wage growth), interest rate hikes are less effective at controlling inflation — and the resulting stagflation risk supports gold demand as a hedge against both inflation and economic weakness.

🌏 Geopolitical Context: Iran War And Saudi-Yemen Escalation

On the geopolitical front, US President Donald Trump said he hoped an end to the war against Iran was near, as the conflict escalated with Saudi aircraft pounding Yemen and Houthi fighters launching drones and missiles at Saudi cities. The contradictory signals — Trump hoping for war's end while the conflict escalates — reflect the uncertainty that sustains gold's safe-haven appeal. Gold tends to rally during periods of geopolitical uncertainty, as investors seek assets that are not exposed to specific country or conflict risks.

💰 Other Precious Metals

Spot silver rose 1.4 percent to $63.83 per ounce, platinum firmed 1.2 percent to $1,772.19 and palladium climbed 1.8 percent to $1,291.89. The broad-based rally across precious metals — gold, silver, platinum and palladium all gaining — suggests that the precious metals complex is benefiting from the combined effect of dollar weakness, easing oil prices and geopolitical uncertainty. Silver's 1.4% gain, outpacing gold's 1.2%, reflects silver's dual role as both a precious metal and an industrial metal — benefiting from both safe-haven demand and industrial recovery expectations.

For Bangladesh, the gold price movement carries implications through the BAJUS (Bangladesh Jeweller's Association) pricing mechanism. As international gold prices fluctuate, BAJUS adjusts domestic gold prices — affecting consumer demand for gold jewellery, which is a significant cultural and savings vehicle for Bangladeshi households. The current rally above $4,300/oz would likely trigger BAJUS price adjustments upward, potentially dampening jewellery demand during the upcoming wedding season. However, the gold import bill also affects Bangladesh's trade balance, with higher gold prices increasing the dollar outflow for gold imports.