Gold Holds Gains as Oil Slump Eases Inflation Anxiety

The Federal Reserve's recent decision to maintain the target range for the federal funds rate at 3.50% to 3.75% continues to dictate market sentiment. Chair Kevin Warsh’s post-meeting commentary left investors wary of future tightening, even as cooling oil prices offered some relief from inflation fears. June PCE inflation data showed core figures at 3.3%, while manufacturing activity reached its strongest level since May 2022. While futures markets suggest a potential September rate hike, the probability has shifted downward following the recent energy selloff.

Equities responded with broad gains as risk appetite returned to North American and European markets. The S&P 500 climbed 1.48% to 7,600.50, and the Dow Jones Industrial Average hit a record 53,178.41. Meanwhile, WTI crude oil dropped to the $78 range, significantly reducing the war premium that previously pushed Brent above $90. Daniela Hathorn, senior market analyst at Capital.com, noted that while the shift toward diplomacy is a positive development, market participants remain cautious as gold and silver continue to trade within established consolidation ranges.