0The Fed Raised Rates. Oil Decided Gold’s Week.
WHAT HAPPENED THIS WEEK
The hike landed. Gold held its ground.
A tense lead-up, a quick dip and a Thursday turnaround.
Gold went into the week under pressure. US bond yields were pushing towards 5%, and markets had all but locked in a US rate rise, with the odds above 90% by meeting day.
The US Federal Reserve delivered on Wednesday. It lifted rates by a quarter of a percentage point to a range of 3.75% to 4.00%, its first rise since 2023, with all 12 voting members in favour. Its statement said inflation remains elevated, and it no longer pointed mainly to supply shocks as the cause.
Gold slipped in the hours that followed as the US dollar firmed and yields jumped. The turn came on Thursday. Oil fell, yields eased back, and gold won back the ground it had lost within a day.
Gold finished the week at A$6,144/oz, up from A$6,062/oz a week earlier, a gain of about 1.4%. That rise ended two straight weeks of losses. Silver did better again, climbing about 3.4% to A$92.82/oz, and all four precious metals closed the week higher.
Gold in AUD per ounce at weekly closing points, late July to 21 September.
The Fed set the headline. Oil set the price.
WHY IT MATTERS
Oil is doing the Fed’s talking
A hike that is already expected changes little. A move in oil changes a lot.
The hike itself was not the news. When a move is that widely expected, markets have already adjusted before it happens. What changed was the outlook: 16 of the 18 officials who submitted forecasts now expect another rise this year, up from six in June.
That matters because of how interest rates compete with gold. When rates rise, cash and bonds pay more, while gold pays no interest at all. The longer rates stay high, the tougher that competition becomes.
The pressure showed up in the bond market first. The yield on the US 10-year government bond, the interest it pays, briefly passed 5% before easing back to around 4.93% on Thursday. That pullback is what gave gold room to recover.
Yields eased because oil fell. Prices dropped for three straight sessions as Saudi Arabia found other routes for its crude and worked to restore a key pipeline. Cheaper oil cools inflation fears, and cooler inflation fears take pressure off rates.
The Fed’s chair made the link himself. He said the central bank cannot control the price of oil, only stop high fuel costs spreading through the rest of the economy. While oil stays high, the case for more hikes stays alive, and each time oil eases, that case weakens.
Silver moved further than gold because most of it goes into industry, which makes it more sensitive to shifts in growth and rates.
Underneath it all, central banks keep buying. China added gold for a 21st straight month in July, taking 20 of the 23 tonnes central banks bought overall. That demand runs on plans set years in advance, and it acts as a floor under the market.
A rate rise everyone expects is old news. The next move in oil is not.
WHAT TO WATCH NEXT
Three ways the coming weeks could play out
Scenario ① Oil keeps easing
Watch for: Progress at this week’s US talks with Gulf leaders, oil sliding further, and a softer reading on US inflation.
What it means for gold: Less pressure on interest rates, which gives gold more room to move higher.
Scenario ② Oil climbs again
Watch for: Fresh disruption around the Strait of Hormuz, oil rebounding, and the odds of an October hike rising above today’s coin flip.
What it means for gold: Rate pressure returns, and gold faces a tougher backdrop in the short term.
Scenario ③ The Fed keeps markets guessing
Watch for: The Fed chair has stepped back from signalling future moves, so each data release and official comment carries more weight.
What it means for gold: Sharper swings in both directions as markets try to read the next step.
These are analytical frameworks for understanding market conditions, not financial advice or predictions.
This article is for educational purposes only and does not constitute financial advice or a recommendation to buy or sell any product. The scenarios above are analytical frameworks, not predictions. Please speak with a licensed financial adviser before making investment decisions. Gold Secure Bullion is an LBMA-certified precious metals retailer.
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