Gold steadies as traders assess US-Iran tensions, Fed rate path
Traders are expecting US borrowing costs to stay unchanged later in October
Gold steadied on Thursday following a previous day's moderate rise, as traders evaluated Middle East tensions stemming from US President Donald Trump's remarks about avoiding an attack on Iran before the November midterm elections. Bullion hovered around US$4,145 per ounce, bouncing back from a two-month low observed earlier in the week, after Trump indicated that the US and Iran were engaging in "productive discussions," without providing specifics.
The benchmark oil prices dipped, although a hurricane threatening production in the Gulf of Mexico kept risks in check. Trump's comments arrived alongside Iran's acceleration of attacks on tankers in the Strait of Hormuz, reigniting concerns about a prolonged conflict. This development has reignited inflation worries due to rising energy costs, prompting certain central banks to tighten monetary policy and exert pressure on the non-yielding precious metal.
Traders anticipate US borrowing costs remaining static later in October but potentially rising over the medium term. Federal Reserve Bank of St Louis president Alberto Musalem suggested on October 8 that interest rates should rise within the next six to nine months to assist inflation in aligning with the US central bank's 2 percent target, though he refrained from endorsing any action at the current policy meeting.
Gold climbed 0.3 percent to US$4,144.05 an ounce as of 8:00 am Singapore time, while silver increased 0.6 percent to US$59.54 an ounce, after slipping 1 percent in the preceding session. Platinum and palladium also saw modest gains. The Bloomberg Dollar Spot Index, a measure of the US currency, remained relatively unchanged.
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