Gold prices swung between gains and losses on Wednesday, according to a Reuters report, as concerns around inflation and higher interest rates rose after fresh US strikes on Iran lifted oil and the dollar ahead of the release of the Federal Reserve's June meeting minutes.
Price Action
Spot gold rose 0.5% to $4,125.59 per ounce by 0305 GMT, after dropping to its lowest since July 2 earlier in the day. US gold futures for August delivery shed 0.5% to $4,136.30.
"Over the past 24 hours, there was a little bit of a scare again on the inflation front. So bonds came in lower, the dollar popped a little, gold pulled back, and now seems to be kind of stabilising after that correction," said Ilya Spivak, head of global macro at Tastylive. He added, "At this point, we've been watching gold attempt to carve out a bottom."
| Metal | Price | Change |
|---|---|---|
| Spot Gold | $4,125.59/oz | +0.5% |
| Gold Futures (Aug) | $4,136.30 | -0.5% |
| Spot Silver | $60.47/oz | +0.8% |
| Spot Platinum | $1,635.45 | -0.3% |
| Spot Palladium | $1,268.64 | -0.6% |
Geopolitical Drivers
The US military unleashed a new wave of strikes against Iran on Tuesday and revoked a licence allowing the country to sell oil after three tankers were hit by projectiles in the Strait of Hormuz. According to the report, US oil prices jumped nearly 3% in early trade, US Treasury yields advanced, while the dollar clung to its highest levels of the week against most peers. The strikes against Iran put pressure on an already fragile ceasefire.
Fed Minutes and Rate Expectations
Markets have increased their bets for a September Federal Reserve rate hike to an over 63% chance, up from about 57% on Tuesday, the CME FedWatch tool showed. Investors also awaited minutes of the Federal Open Market Committee's June 16-17 meeting, due later today, for fresh clues on the interest rate path under Fed Chair Kevin Warsh. While gold is seen as an inflation hedge, high interest rates tend to weigh on the non-yielding asset.
Other Precious Metals
Among other metals, spot silver rose 0.8% to $60.47 per ounce, platinum slipped 0.3% to $1,635.45, and palladium dropped 0.6% to $1,268.64.
The interplay between geopolitical tensions and monetary policy expectations continues to drive volatility in precious metals markets. For traders, the key data point remains the FOMC minutes, which could offer further direction on the pace of rate hikes against a backdrop of rising oil prices and inflationary pressure.
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