Gold edged up 0.4% to $4,043.38 an ounce on Wednesday as investors held back before the U.S. Federal Reserve’s policy decision. A rebound of more than 4% in oil prices, following renewed U.S.-Iran hostilities, rekindled inflation worries that ING analysts expect to weigh on the metal.
Spot gold edged up 0.4% to $4,043.38 an ounce by 03:00 ET (07:00 GMT) on Wednesday, as investors refrained from making large bets ahead of the Federal Reserve’s policy decision later in the day. U.S. gold futures traded flat at $4,040.10. The yellow metal had slipped more than 1% in the previous session as a stronger U.S. dollar weighed.
Fed decision keeps traders cautious
The U.S. Dollar Index ticked 0.1% lower on Wednesday but remained near a one-month high, making gold more expensive for overseas buyers. However, the Federal Reserve is widely expected to leave interest rates unchanged at the conclusion of its two-day meeting later on Wednesday.
According to CME Group’s FedWatch Tool, traders see the central bank keeping rates on hold, with markets focusing instead on Fed Chair Kevin Warsh’s comments for clues on the timing of any future policy easing. Higher-for-longer interest rates typically weigh on gold by increasing the opportunity cost of holding the non-yielding asset.
Oil rebounds more than 4% after Iran strikes
Investors also continued to monitor geopolitical developments after Iran launched ballistic missiles at U.S. forces in the Middle East, all of which were intercepted, according to U.S. Central Command. Iraq’s Iran-aligned Popular Mobilization Forces said U.S. and Saudi forces carried out airstrikes on its headquarters across several Iraqi provinces.
Saudi Arabia separately said it intercepted drones launched from Iraqi territory targeting oil facilities and blamed Iran-backed militias for the attacks. Those attacks ended a four-day pause in direct military exchanges between Washington and Tehran and raised the risk of renewed escalation after a brief diplomatic opening.
Oil prices rebounded more than 4% on Wednesday after the latest exchange, rekindling inflation worries. ING analysts expect the higher oil prices to weigh on gold in early morning trading: “Higher oil prices amid a re-escalation in the Middle East will weigh on gold”.
Traders are also looking ahead to U.S. economic data later this week, including the personal consumption expenditures price index and the July payrolls report, for further insight into the outlook for interest rates.
Silver climbs as copper slips
Among other precious metals, silver rose 1.7% to $58.11 per ounce, while platinum was muted at $1,605.02 an ounce. On the London Metal Exchange, benchmark copper futures edged down 0.2% to $13,663.33 a ton, while U.S. copper futures ticked up 0.1% to $6.339 a pound.
Source: Investing.com
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