NEW YORK: Gold drifted lower on Wednesday after hitting a one-month peak as investors assessed the latest signals on the US–Iran situation and what they could mean for the interest rate outlook.
Spot gold was down 0.7 percent at USD4,807.34 per ounce as of 11:22 a.m. ET (1522 GMT), after hitting its highest since March 18 earlier in the session. US gold futures fell 0.4 percent to USD4,830.60.
“Gold and silver are just seeing some mild and routine profit-taking after scaling overnight highs,” said Jim Wyckoff, senior analyst at Kitco Metals.
“Gold prices have been rallying on improved risk appetite and selling off during bouts of risk aversion in recent sessions, running counter to the metal’s traditional safe-haven role. Traders are currently more focused on the implications of tighter monetary policy and inflation pressures,” he added.
US President Donald Trump said the war with Iran was close to over, telling the world to brace for an “amazing two days”, as the army chief of mediator Pakistan arrived in Tehran in a bid to prevent a renewed conflict.
Oil prices were little changed as shipping through the Strait of Hormuz remained constrained. Forty-five days after Iran’s Revolutionary Guards declared the strait closed, transit through the waterway remains uncertain despite a two-week ceasefire.
The Federal Reserve may need to wait until 2027 to cut interest rates if an extended bout of high oil prices from the Iran war delays inflation’s progress towards the US central bank’s 2 percent goal, Chicago Fed President Austan Goolsbee said on Tuesday.
The market currently sees a 30 percent chance of a US rate cut this year.
Higher interest rates tend to weigh on gold by increasing the opportunity cost of holding a non-yielding asset, offsetting the metal’s appeal as an inflation hedge.
Among other metals, spot silver held steady at USD79.58 per ounce, while platinum rose 0.2 percent to USD2,108.79. Palladium was down 1.2 percent at USD1,568.15.
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