Gold climbs as oil retreat tempers Fed rate-hike worries; Iran diplomacy in focus

Gold prices moved modestly higher on Wednesday, supported by a steep pullback in oil that diminished inflation worries and curbed expectations of additional U.S. Federal Reserve interest-rate increases.

Renewed diplomatic signals between the U.S. and Iran also bolstered bullion, while Fed officials kept offering differing views on how policymakers should confront persistent inflation.

At 21:06 ET (01:06 GMT), XAU/USD advanced 0.4% to $4,359.40 an ounce, while Gold Futures added 0.3% to $4,396.85. XAG/USD climbed 0.6% to $66.43 an ounce, and XPT/USD rose 0.3% to $1,809.03. The U.S. Dollar Index edged lower to 100.39.

Oil’s slide cushions inflation pressure and Fed rate-hike worries

Gold turned higher after Monday’s largest drop in a week. Oil prices stabilized on Wednesday after losing more than 9% across the prior four sessions, as worries about Middle Eastern supply disruptions abated and renewed diplomatic efforts raised hopes for an eventual de-escalation.

President Donald Trump was scheduled to address the United Nations General Assembly in New York, where he had indicated openness to meeting Iranian President Masoud Pezeshkian on the sidelines.

Those remarks followed Trump’s earlier threat to “annihilate” Iran if the conflict continued. Recent reporting also showed Saudi Arabia had restarted operations on its East-West oil pipeline, enabling the kingdom to restore part of an alternative route around the Strait of Hormuz.

Elevated energy prices can stoke inflation and encourage tighter monetary policy, whereas cheaper oil lessens that pressure. Gold generally benefits when rate expectations decline because the metal does not generate interest.

Investment demand is recovering. According to ANZ, roughly 50 tonnes of gold have flowed into bullion-backed ETFs so far in September, keeping the sector on course for a third consecutive month of inflows.

ANZ research said gold has been trading within a comparatively narrow range as investors weigh the prospect of further rate increases against improving investment demand.

The bank noted that Chinese imports reached 1,000 tonnes in the first eight months of 2026, while Chinese gold ETFs added around 44 tonnes in August. The People’s Bank of China accelerated purchases to about 20 tonnes in August.

Investors are monitoring Fed officials for clues on the rate path after last week’s first hike in three years. Chicago Fed President Austan Goolsbee cautioned that persistent supply shocks might require a policy response, while St. Louis Fed President Alberto Musalem said additional hikes could be needed to return inflation to target.