Gold Holds Near $4,325 as US and Iran Prepare Peace Deal, Fed Decision Looms
By Aboki Forex —
Gold prices held firm on Wednesday, trading near $4,325 an ounce, as the United States and Iran moved closer to signing an interim peace deal. The agreement could ease global inflationary pressures linked to the war.
Bullion has gained more than 6% over the past four sessions. Financial details of the deal are emerging. Iran would be allowed to sell its oil immediately and eventually access its frozen assets.
US President Donald Trump has promised the Strait of Hormuz can fully reopen by Friday. Some European allies remain wary of potential risks. Opening the waterway would ease an energy supply crisis that has pushed inflation higher and forced many central banks to keep rates on hold or hike them.
Higher interest rates are negative for gold, which does not yield interest. Attention is now shifting to the first Federal Reserve policy decision under new chairman Kevin Warsh later on Wednesday. Investors want clues on how he will handle inflation risk. Market expectations are for rates to stay on hold.
Analysts from Standard Chartered Plc, including Emily Ashford, said in a note that gold's firming correlation with real yields shows focus has shifted to the upcoming Fed meeting. They added that while the US-Iran pact bodes well for gold finding a price floor sooner rather than later, prices are likely to remain volatile. The precious metal dipped below its 200-day moving average earlier this month.
Gold edged down 0.1% to $4,324.76 an ounce as of midday trading.