Gold rises as investors digest Fed hike, oil rally stalls

Spot silver XAG= rose 1.5% to $63.91 per ounce, platinum XPT= firmed 1.9% to $1,784.42 and palladium XPD= climbed 2.4% to $1,299.59.

Although gold is considered an inflation hedge, higher rates reduce its appeal by boosting the attractiveness of interest-bearing assets.

The Fed raised rates on Wednesday and flagged more hikes in the coming months, with new chief Kevin Warsh joining a unanimous decision that effectively acknowledges the Trump administration's inability so far to control inflation that policymakers worry could worsen.

Updated quarterly economic projections showed 16 of 18 policymakers anticipate at least one more quarter-percentage-point hike by year-end, with only two of them seeing rates remaining stable from here.

The Bank of England looks set to keep rates on hold on Thursday, but investors are watching for any hint that higher energy prices could force it to follow the Fed's example.

On the geopolitical front, U.S. President Donald Trump said he hoped an end to the war against Iran was near, as the conflict escalated with Saudi aircraft pounding Yemen and Houthi fighters launching drones and missiles at Saudi cities.

Gold rose on Thursday as investors digested the U.S. Federal Reserve's interest rate hike and its signal that further policy tightening could follow, while an earlier rally in oil prices faded.

Spot gold XAU= was up 1.2% at $4,314.64 per ounce, as of 0710 GMT, after hitting a near six-week low on Wednesday. U.S. gold futures GCcv1 for December delivery were down 0.8% to $4,353.90.

Oil prices eased, extending losses on reports of Saudi Arabia offering extra crude cargoes through Oman. O/R