Gold prices edged higher on Tuesday as a preliminary U.S.-Iran peace agreement eased concerns of rate hike by the Federal Reserve, while investors awaited further details on the deal. Spot gold was up 0.3% at $4,317.43 per ounce, and looked set to extend gains to a fourth straight session. Meanwhile, U.S. gold futures for August delivery dipped 0.3% to $4,338.70.
U.S. President Donald Trump said on Monday a preliminary agreement to end the war in the Persian Gulf has been signed by the U.S. and Iran, though details have yet to be made public and both countries said a permanent truce is yet to be negotiated. “We have had a good run in gold prices ever since late Thursday on the Iran news. I think this euphoria rally might last for another few days culminating in Friday’s signing ceremony,” said Edward Meir, an analyst at Marex.
The U.S. dollar held near 10-day lows, making greenback-priced bullion cheaper for other currency holders. Investors are also watching out for the Fed’s policy decision and remarks, the first under Chair Kevin Warsh, on Wednesday, with rates widely expected to remain unchanged. “Markets are expecting no rate decreases this year. If Warsh signals that at least one cut could be on the table later this year, the dollar should decrease further and we could see another rally in gold,” Meir said.
“However, if he comes across as more hawkish on rates, gold could come under some pressure.” Traders have scaled back expectations for a U.S. rate hike in December to 57% after the peace deal from about 70% last week, according to the CME FedWatch tool. Gold loses its appeal when rates are high, as it does not yield interest.
Meanwhile, the Bank of Japan raised interest rates to a 31-year high in its first hike since December, aligning it with other central banks shifting towards tighter policy to combat inflation. Spot silver fell 0.9% to $69.42 per ounce, platinum lost 0.3% to $1,762.34, and palladium was down 1.1% to $1,333.13.
Source: Reuters
–Agencies