Gold prices are steady below the $4,300‑per‑ounce mark as markets await the Federal Reserve’s rate decision due later Wednesday.

Surging oil prices keep inflation fears elevated, leaving a Fed rate hike all but priced‑in. Gold hovers around $4,290 an ounce, extending a two‑day losing streak. Elevated energy costs have driven Treasury yields higher, with traders now assigning a 92% probability to a Fed rate increase. Since gold generates no interest income, higher borrowing costs typically act as a headwind for the metal.

Fueled by robust capital investment and inflation‑fanning energy price spikes, the US 10‑year Treasury yield has climbed to a near‑20‑year high, marking another milestone in the global bond market rout. The benchmark for global borrowing costs rose 5 basis points to 5.04% on Tuesday, its highest reading since 2007.

This has further boosted expectations for the central bank’s first rise in short‑term borrowing costs since 2023. Should the Fed refrain from hiking, or if Chair Kevin Wash offers vague commentary on additional tightening, traders may demand higher long‑dated bond yields to shield holdings from persistent high inflation.

Oil prices stabilized following two consecutive daily gains. Uncertainty lingers over how long Saudi Arabia’s East‑West pipeline will remain shut after last week’s attack. The pipeline allowed millions of barrels of crude per day to bypass the Strait of Hormuz, and Saudi Aramco is currently delaying crude deliveries to some European customers.

Gold has fallen more than 3% in September, after briefly topping $4,700 an ounce at late‑August, as traders keep recalibrating outlooks for Fed policy. Even so, many investors remain betting the metal will regain upward momentum once it re‑asserts its traditional role as a portfolio hedge.

At 7:55 a.m. Singapore time, spot gold edged 0.2% lower to $4,282.34 per ounce. Silver was largely flat at $63.67 an ounce. Platinum dipped 0.2%, while palladium rose 0.1%. The Bloomberg Dollar Spot Index held steady after a 0.2% advance in the prior session.

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