Gold steadies as traders weigh Fed rate path and Mideast tension

Gold steadies as traders assess the Federal Reserve's rate path and Middle East tensions. The metal remained flat after dipping below the US$4,400-per-ounce mark, with traders evaluating the U.S. Federal Reserve's interest rate strategy and the potential for a resolution to reopen the Strait of Hormuz. A mild U.S. inflation report suggested that energy price shocks from the Iran conflict had lessened in July, easing pressure on the Fed to adopt a more aggressive monetary policy.

Money markets anticipate a one-in-three probability of a September rate increase. Before the Fed convenes again in September, further employment data will be released, and investors will monitor Chairman Kevin Warsh's comments at the central bank's annual Jackson Hole symposium in August. While the likelihood of no rate hike is favorable for non-yielding gold, persistent elevated rates could hurt bullion by making bonds more appealing.

Gold's rebound above the critical US$4,000-an-ounce level in recent weeks has been fueled by heightened investor interest and increased central bank purchases, particularly from China. Gains earlier this week propelled the metal above its 100-day moving average for the first time since April, but it has since retraced below the threshold.

Strategist Christopher Wong noted that the macroeconomic landscape had become more favorable, although market positioning is less supportive, and technical momentum appears stretched following the recent rebound. Gold rose 0.2 percent to US$4,359.73 per ounce at 7:22 a.m. Singapore time, after falling 1.3 percent on Thursday. Silver remained unchanged at US$64.55 per ounce, while platinum and palladium also stayed flat. The Bloomberg Dollar Spot Index, a measure of the U.S. currency, experienced a slight decline.