NEW YORK: Gold rose to its highest level in two weeks on Wednesday, buoyed by a softer dollar and technical buying, as markets weighed signs of lingering tensions in the Middle East and awaited fresh cues on US interest rates from the Federal Reserve.
Spot gold gained 1.3percent to USD4,130.59 per ounce by 08:32 a.m EDT (1232 GMT), having hit its highest level since July 7 at USD4,141.59 per ounce earlier in the day. US gold futures for August delivery rose 1.5percent to USD4,135.40.
“Gold exploded higher, punching above USD4,140 as a weaker dollar and dip buyers injected fresh inspiration into bulls,” said Lukman Otunuga, senior research analyst at FXTM. However, “the underlying bearish fundamentals may cap upside gains — especially with oil prices up over 3percent this morning,” he added.
The U.S dollar index softened on Wednesday, making greenback-priced bullion more affordable for buyers overseas. US Secretary of State Marco Rubio said on Wednesday Washington is willing to negotiate an end to the Iran crisis but Tehran is not serious about talks.
The widening conflict led four tankers loaded with Saudi crude for Asia to reverse course in the Red Sea on Wednesday after threats from Yemen’s Iran-aligned Houthis, who control the coast on the southern route out. Oil prices rose to a near six-week high on the news. Elevated oil prices due to Gulf supply disruptions have been weighing on gold prices as they raised expectations of higher-for-longer interest rates, which tend to diminish the appeal of non-yielding gold.
Meanwhile, the Fed is likely to keep its key interest rate steady for the rest of 2026, data from a Reuters Poll showed, with markets pricing in two rate hikes by the end of March next year. Traders anticipate about a 72percent chance of an interest rate hike in September, according to the CME FedWatch Tool.
Investors are now eyeing the FOMC interest-rate decision meeting next week for further clues on the Fed’s monetary stance. Elsewhere, spot silver rose 1.1percent to USD59.4 per ounce, platinum gained 1.1percent to USD1,647.17 and palladium inched up 2.9percent to USD1,319.74.
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