Gold stays near $4,375 amid inflation concerns and US rate hike signals

Asian gold prices hover close to $4,375 an ounce as traders assess persistent inflation, higher US borrowing costs, and the Fed’s tightening measures, with prospects of further rate hikes looming.

Gold prices in Asia held close to $4,375 an ounce on 21 September as traders weighed stubborn inflation, higher US borrowing costs and the Federal Reserve’s latest move to tighten policy. The metal was still drawing support from expectations that the rally could continue, even though a rising interest-rate environment usually works against non-yielding assets such as bullion. 

That resilience followed the Fed’s quarter-point increase, which lifted the target range to 3.75% to 4% and marked the central bank’s first rate move under Kevin Warsh. Axios reported that the Fed’s updated projections still point to sticky inflation, with policymakers signalling that further increases may be needed before year-end. Market pricing reflected that possibility, with CME’s FedWatch tool putting the odds of another October hike at 55%. 

Adrian Day, president of Adrian Day Asset Management, said the combination of high rates and doubts about the Fed’s ability to tame inflation has strengthened gold’s appeal as a haven. Neel Kashkari, president of the Federal Reserve Bank of Minneapolis, said on 20 September that inflation remained too high and that price pressures had broadened beyond the effects of Middle East oil shocks. 

Energy markets are also part of the equation. Oil prices were steady as traders monitored supply risks linked to tensions between the US and Iran, and any further rise in energy costs could keep US rates elevated for longer. In Vietnam, Saigon Jewelry Company quoted SJC gold in Hanoi at 144.60 million to 147.60 million dong per tael at the start of trading on 21 September. 