Gold Stalls as Saudi Refinery Attack Revives Energy Inflation Fears

Gold traded near $4,054.60 an ounce on Wednesday, shedding 0.16% as markets braced for the Federal Open Market Committee's interest rate decision. While the Fed is widely expected to pause at the 3.75% to 4.00% range, the market currently assigns an 84% probability to a rate hike by December. This expectation, coupled with a firm dollar and benchmark 10-year Treasury yields hovering around 5.0%, continues to cap gold's upside potential.

The volatility in energy markets stems from a claimed Houthi attack on the Ras Tanura refinery, a critical facility capable of processing 550,000 barrels per day. Although Saudi officials have yet to confirm the extent of the damage, the incident has erased the optimism generated by recent diplomatic talks in Tehran. For precious metals, the situation creates a complex headwind: while military escalation typically drives flight-to-safety buying, the resulting spike in crude oil threatens to keep inflation elevated, potentially forcing a more hawkish stance from central bankers at the Fed, the European Central Bank, and the Bank of Japan.

Technically, gold bulls face an immediate resistance zone between $4,059.00 and $4,079.00. Should the price fail to hold support at $4,039.00, bears may push the metal toward a downside target of $4,015.00. Silver remains similarly pressured, trading near $54.202, as concerns over industrial demand and high borrowing costs weigh on the metal's performance.