Gold Rallies as Saudi Arabia Restores Oil Exports

Gold prices rallied as much as 2.8% to exceed $4,380 an ounce on September 18, driven by sliding crude oil prices that eased inflation concerns. The recovery occurred despite the Federal Reserve System's unanimous decision to raise interest rates by a quarter percentage point, the first hike since 2023. While Federal Reserve Chairman Kevin Warsh suggested rates may remain higher for longer, cooling Treasury yields provided support for the metal.

Crude oil prices, including Brent and WTI, declined as the Government of Saudi Arabia normalized energy exports. The market responded to reports that Saudi Arabia is repairing its 750-mile East-West pipeline, which was shut down after Houthi drone attacks damaged three pumping stations. Saudi Aramco expects to restore up to 50% of the pipeline's capacity within days and full production within six weeks. To offset the disruption, Saudi Arabia utilized ship-to-ship transfers to supply Asian refiners and diverted flows to terminals outside the Strait of Hormuz.

Regional tensions remain volatile. Houthi rebels captured the port city of Mokha, and the Navy of the Army of the Guardians of the Islamic Revolution reported striking a Togo-flagged tanker in the Strait of Hormuz. Additionally, a Ukrainian drone attack damaged a refinery in Yaroslavl, Russia. Amidst these conflicts, President Donald Trump stated that the U.S. is likely nearing the end of its war with Iran, which further lowered Middle East tensions and contributed to the oil price retreat.