Precious Metals Rebound Despite Fed Hike as Oil Prices Ease

Precious metals rebounded overnight despite the Federal Reserve's first-rate hike since 2023 on Wednesday, as traders shifted their focus from the hike itself to the path of future policy tightening and easing oil-price concerns. 

Daily Performance 

• Gold: Currently trading at USD $4,345oz, +1.7% (AUD $6,111oz) 

• Silver: Currently trading at USD $65.4oz, +3.4% (AUD $92oz) 

• Platinum: Currently trading at USD $1,777oz, +0.7% (AUD $2,498oz) 

Other Commodity News 

• Crude oil WTI futures fell back below US$100/bbl overnight after Saudi Arabia increased alternative export routes through the Strait of Hormuz, easing immediate supply concerns following the East-West pipeline disruption (AFR).  

• Copper continued to trade firmly (Copper futures remain near historical highs of USD 6.6/pound), supported by resilient global growth expectations and electrification trends.  

Key Market Drivers 

• The Fed raised rates 25bps to 3.75%-4.00% and signalled at least one additional hike remains possible. Current probabilities place a hike in December at 87% (CME Group). It should be noted that much of the hawkish Fed outcome had already been priced in prior to Wednesday’s decision.  

• The US 10-year nominal Treasury yield remains near 5%, a traditional headwind for precious metals as a non-yielding asset.  

• However, falling oil prices, ongoing ETF and central bank inflows helped support bullion.  

Markets now turn to whether US yields can remain above 5%. A further retreat in oil prices and bond yields would be supportive for precious metals, while any renewed escalation in Middle East tensions or stronger-than-expected US data could reinforce expectations for another Fed hike and pressure metals in the short term. Institutional positioning and ETF flows remain key indicators of underlying demand. 

Luke Tyler
Senior Analyst, ABC Bullion

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