Gold and silver rebound as oil rally cools on Saudi pipeline news

Gold and silver prices rebounded on Thursday as cooling crude markets eased inflation concerns, with the yellow metal climbing 1.1% to $4,308.80 per ounce by 0950GMT after losses in the previous session and the white metal also posting strong gains.

Oil market relief

The recovery came as Saudi Arabia moved to restore around half of the capacity of its East-West oil pipeline within days — with full operation expected within six weeks — helping to cool crude prices that had stoked inflation fears and threatened to disrupt global supply chains. US Energy Secretary Chris Wright said 18 million barrels of crude oil and petroleum products had passed through the Strait of Hormuz earlier in the week, adding to the improved supply outlook and easing concerns over maritime trade disruptions in the strategic chokepoint.

Fed tightening limits upside

The US Federal Reserve on Wednesday lifted its federal funds target range by 25 basis points to 3.75%-4%, marking its first rate increase in three years and signaling further tightening before year-end. Fed Chair Kevin Warsh stated that inflation remained elevated, referencing figures released last week that showed core US inflation rose more than expected in August.

Higher interest rates typically weigh on precious metals by increasing the opportunity cost of holding them compared with yield-bearing investments. The Fed has signaled another potential increase before year-end. Silver gained 1.2% to $63.97 per ounce, bringing its annual advance to almost 53% — significantly outpacing gold's rise of more than 18%.