Gold inches higher, focus on Fed minutes

Gold prices experienced a slight increase in the early Asian trading session on Wednesday, as US Treasury yields showed a decrease from their recent peaks, while investors awaited the Federal Reserve's meeting minutes. Spot gold rose by 0.2% to US$4,342.33 per ounce by 0030 GMT, following a significant drop of nearly 2% on Tuesday.

In contrast, US gold futures for December delivery experienced a 0.6% decline to US$4,396.30. US yields retreated from earlier highs, with global bond selloff driving long-term borrowing costs in major economies nearing their highest levels in decades. President Donald Trump declared that no discussions were taking place with Iran and asserted that the Strait of Hormuz remained open, contradicting Iran's claim that the vital waterway remained closed to shipping.

The possibility of a deal to end the nearly six-month conflict increased the demand for oil. Higher energy prices might support the case for higher interest rates to curb inflation, despite recent US economic indicators indicating unexpected employment losses, lower inflation, and weak retail spending in July. Even though gold is traditionally considered an inflation hedge, higher rates typically have a negative impact on gold prices, as they strengthen the dollar and render yield-bearing assets more appealing to investors.

The Federal Reserve will release the minutes from their latest monetary policy-setting meeting at 1800 GMT. Traders currently estimate a 65% probability that the US central bank will maintain rates unchanged and a 35% chance of a rate hike in September, according to the CME FedWatch Tool. Meanwhile, the Bank of England will keep interest rates at 3.75% for the remainder of the year, according to a majority of economists polled by Reuters.

Among other metals, spot silver declined by 0.5% to US$62.99 per ounce, platinum increased by 0.3% to US$1,717.03, and palladium dropped by 0.3% to US$1,286.73.