NEW YORK: Gold rose more than 1percent on Wednesday as investors assessed simmering geopolitical risks, while markets also awaited the US Federal Reserve’s January meeting minutes due later in the day.
Spot gold was up 1.7percent at USD4,957.70 per ounce by 9:15 a.m. ET (1415 GMT). Bullion prices dropped to USD4,841.74 on Tuesday. US gold futures for April delivery gained 0.5percent to USD4,977.80.
“There is some nervousness about the existing geopolitical tensions both with Iran and the US,” said Marex analyst Edward Meir.
However, “we’ve been in a very tight trading range for much of February.
You can’t really say there’s a clear direction at this point.” On the geopolitical front, the first day of US-mediated Ukraine–Russia peace talks in Geneva wrapped up after just two hours, with President Zelenskiy describing the discussions as “difficult” and accusing Moscow of stalling.
Meanwhile, Iran on Tuesday said it reached a set of “guiding principles” with the US for nuclear talks, though its foreign minister cautioned that a final deal is not imminent. Gold, a traditional safe-haven asset, hit a record high of USD5,594.82 on January 29.
The non-yielding metal also tends to benefit in low-interest-rate environments. Investors await minutes from the US Federal Reserve’s January 16-17 meeting, due at 2 p.m. ET on Wednesday amid easing labor-market risks and slow progress on inflation.
“The narrative has shifted since the last Fed meeting, when policymakers were more cautious. Markets are seeing a different picture now, so I don’t think the minutes will reveal much,” Meir said.
Investors will also scrutinize Friday’s US personal consumption expenditure report, the Fed’s preferred inflation gauge, for clues on inflation and its potential impact on borrowing costs. Markets currently expect a total of two rate cuts this year, with the first expected in June, per CME’s FedWatch Tool.
In other metals, spot silver rose 4.7percent to USD76.88 per ounce after declining more than 4 percent on Tuesday. Spot platinum gained 3percent to USD2,067.10 per ounce and palladium added 2.1percent to USD1,718.65.
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