Gold prices fell on Thursday where it was caused by the further interest rate hike sentiment from the United States Federal Reserve. The focus now is turning to inflation data to be released next week.

That is one of a crucial factors for central bank's monetary policy plans. The Spot gold fell by 0.5% to $1,865.60 an ounce. It means that commodity was rising as high as $1,890.18.

It was happened after U.S. jobless claims data. The American gold futures was 0.7 lower to make it on $1,878.50. Gold is trying to digest the central bank's comments and how much further rate hikes that will be taken. 

That was said by Phillip Streible, a chief market strategist at Blue Line Futures in Chicago. Some Fed officials said Wednesday there were more chances of a rate hike.

Gold Is Sensitive to Rising Interest Rates

The Richmond Fed's Tom Barkin saying that it Makes sense to steer more deliberately. It is as the U.S. central bank studies the impact of monetary policy on the economy and if inflation continues to slow.

Gold is very sensitive to rising interest rate. as this increases the opportunity cost of holding assets that do not provide returns. The dollar index fell by 0.6%. 

A weaker greenback tends to make gold bars priced in dollars an attractive instrument. However, the benchmark 10-year Treasury yield strengthened, weighing on gold. 

Meanwhile, Oil prices fell after the US oil inventories hit their highest level in months and signs that the Federal Reserve could continue to raise interest rates as soon as possible. 

China’s Recovery Always Supports Oil

Brent crude futures fell by 69 cents to $84.40 a barrel. Meanwhile, the United States West Texas Intermediate (WTI) crude futures edged down 76 cents to $77.71 a barrel.

Relentlessly rising U.S. commercial inventories and deep-rooted inflation potential limit any immediate upside potential. This was said by PVM analyst Tamas Varga.

He said that China's recovery in demand and falling inflation still supported oil prices in the second half of the year. It could be seen from any data released lately. 

The Crude stockpiles in the United States rose last week to their highest level since June 2021. It was helped by higher production As the Energy Information Administration said.

Bearish Signal is Still Exist 

The United States Federal Reserve officials say more rate hikes will occur as the bank continues with its efforts to cool inflation. It was sending bearish signals across risky assets such as oil and equities

However, the prospect of stronger demand from China provides some support to oil prices. That is as the world's second-largest oil consumer ends a strict zero-COVID policy for more than three years.

Oil prices posted weekly gains of more than 8%. It was as Russia announced plans to reduce oil production next month after the West imposed price limits on the country's crude and fuel oil.

Brent crude oil futures rose by $1.89, or 2.2%, to $86.39 a barrel. The American intermediate West Texas Intermediate (WTI) crude rose by $1.66, or 2.1%, to $79.72.

Russia Plans to Reduce it’s Production 

Russia has a plan for reducing it’s oil production by 500,000 barrels per day (bpd) in March. It means the amount was about 5% of production, Deputy Prime Minister Alexander Novak said.

Western countries have imposed restrictions, trying to stop Russian oil revenues in response to the country's actions in Ukraine. Production cuts suggest that the European Union's recent price restrictions.

They also suggest to ban on Russian oil products, which went into effect on February 5. This has had some impact. Russia's production last year defied forecasts of a downturn.

However, its oil sales will prove more difficult to face new sanctions. Meanwhile, OPEC doesn’t prepare any further actions after hearing the Russia’s plan.