In the early hours of September 17, the Fed announced a 25-bASIs-point rate hike, lifting the federal funds rate to 3.75%-4.00%. This marked its first rate hike since July 2023 with unanimous voting, releASIng hawkish signals. Shortly after the news release, spot gold plunged to $4235.00 per ounce, hitting the lowest level in nearly six weeks. A typical "bearish factors fully priced out" market then emerged. Short sellers took profits, and gold finally closed at $4263.85 per ounce. Gold continued its recovery on Thursday and staged a V-shaped reversal, with the maximum intraday rebound exceeding $100 per ounce. Oil prices fell by 2% on Friday, declining for the third consecutive trading day. Although concerns over the escalation of the Middle East conflict linger, eased worries over Saudi supply disruptions dominated the market and pushed gold to a one-week high. During the European session, spot gold once neared $4400.00 per ounce and retreated to around $4379.00 per ounce before press time. Fed Governor Bowman will deliver a speech later, which may affect the US Dollar trend and indirectly offer some momentum for gold prices.

US initial jobless claims dropped last week, the latest sign of economic recovery, which may force policymakers to implement further rate hikes this year. The US Department of Labor said on Thursday that initial jobless claims for the week ending September 12 stood at 196,000, down 10,000 from the unrevised 206,000 reported a week earlier. Continuing jobless claims for the week ending September 5 reached 1.73 million, a decrease of 39,000 from the downwardly revised total of the prior week. Data for continuing jobless claims usually lags one week behind initial claims. Signs of a peRSIstently strong labor market will put pressure on the Fed and may force it to keep tightening monetary policy. In addition, as expected by the market, the Bank of Japan raised its policy rate by 25 bASIs points to 1.25% on Friday, the highest level since 1995.

Geopolitically, although a new round of clashes broke out between Saudi Arabia and Yemen’s Houthi rebels along the border on Thursday, expanding the Middle East front, the market largely ignored new supply threats. Oil prices surged to a nearly four-month high earlier this week. Previously, crude loading at Yanbu, Saudi Arabia’s Red Sea export hub, was temporarily suspended and Riyadh canceled some cargo shipments bound for Europe after reports that the East-West Pipeline was damaged in an attack last week. However, oil prices have pulled back amid reports that Saudi Arabia seeks to restore roughly half the transport capacity of its East-West Pipeline within a few days and supply more crude to ASIan refiners via ship-to-ship transfers near Oman’s Sohar Port.

Short-term gold market outlook: The upside resistance for spot gold is at $4450.00 per ounce, while the downside support sits at $4200.00 per ounce.

Spot Gold Daily Chart

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