Gold and silver moved higher on Wednesday, buoyed by a retreat in oil prices and a modest pullback in Treasury yields, as investors positioned ahead of the Federal Reserve's rate decision later in the day. The precious metals complex found support from easing near-term inflation concerns, even as geopolitical risks in the Middle East remained a backdrop.
Fed decision in focus
The Federal Reserve is widely expected to raise interest rates at today's meeting, with market pricing suggesting a 90% to 93% probability of a hike. However, traders are paying closer attention to Chairman Kevin Warsh's press conference and the updated 'dot plot' for signals on the future path of policy. The tone could determine whether the dollar and yields regain influence over gold and silver.
Retail sales beat expectations
Data released earlier today showed August retail sales rose 1.2%, exceeding the 0.7% consensus forecast. The 'control group' component, which feeds directly into consumer spending estimates, climbed 1.4%, an even stronger reading. These figures represent the final major hard data points before the Fed's announcement and could shape the committee's outlook.
Oil slips on inventory build
WTI crude futures traded around $102.66 per barrel after a reported 7.1 million-barrel increase in U.S. crude inventories, while Brent fell below $105.80. Despite the pullback, supply risks persist: a Saudi East-West pipeline remains shut following an attack, and Yemen's Iran-backed Houthi rebels have continued to target Saudi infrastructure and shipping, including missile strikes on vessels in the Strait of Hormuz.
Gold's dual support
The drop in oil prices is easing some of the inflation pressure that had driven gold to record highs. At the same time, ongoing geopolitical tensions keep a defensive bid under the metal, as investors remain wary of potential supply disruptions that could reignite energy costs. This combination of cooling inflation signals and persistent risk has left both gold and silver higher heading into the Fed decision.
Key levels to watch
Gold has rebounded from support near $4,283 and is now approaching resistance at $4,354. Silver has recovered above $64.40 and is testing the next upside area around $65.28. The metals remain sensitive to Warsh's commentary. If the Fed frames the expected hike as a limited response to oil-driven inflation, gold and silver could extend their recovery. However, if projections point to a broader tightening cycle, the dollar and Treasury yields may regain the upper hand.
For broader market context, see our coverage on Nasdaq's climb ahead of the Fed and gold's resilience above $4,300.
This article is for informational purposes only and does not constitute financial advice.
