Gold, silver rebound as easing oil rally tempers inflation concerns

Precious metals rebounded on Thursday as the recent oil price rally lost momentum, easing concerns over energy-driven inflationary pressures.

Gold climbed 1.1% to $4,308.80 per ounce as of 0950GMT, recovering from losses recorded in the previous session.

Silver gained 1.2% to $63.97 per ounce. The metal was up almost 53% from a year earlier, compared with gold’s annual gain of more than 18%.

The recovery came as reports that Saudi Arabia was seeking to restore around half of the capacity of its East-West oil pipeline within days and return the route to full operation within six weeks helped cool crude prices.

Sentiment was also supported by US Energy Secretary Chris Wright’s statement that 18 million barrels of crude oil and petroleum products had passed through the Strait of Hormuz earlier in the week.

However, gains in precious metals remained limited after the US Federal Reserve raised interest rates and signaled another increase before the end of the year.

The Fed on Wednesday lifted its federal funds target range by 25 basis points to 3.75%-4%, marking its first rate increase in three years.

Fed Chair Kevin Warsh said inflation remained elevated, while figures released last week showed that core US inflation rose more than expected in August.

Higher interest rates typically weigh on non-yielding assets such as gold and silver by increasing the opportunity cost of holding them.