Gold edges higher as traders weigh US-Iran tensions and interest rates
US borrowing costs are expected to remain unchanged later this month, while a Federal Reserve official has signalled increases over the medium term.
Gold gained 0.3% on Oct 9, reaching US$4,144.05 an ounce at 8:00am Singapore time, as traders weighed tensions involving Iran and the outlook for US interest rates. The metal had recovered from a two-month low following a modest gain in the preceding session.
President Donald Trump said the US would not attack Iran ahead of November midterm elections and described discussions with Iran as productive, but provided no details. Iran had accelerated attacks on tankers passing through the Strait of Hormuz, adding to concerns about the conflict, now in its eighth month.
Higher energy costs have revived inflation concerns, prompting monetary tightening by some central banks and putting pressure on gold. Traders expect US rates to remain unchanged later this month before rising over the medium term. Federal Reserve Bank of St Louis President Alberto Musalem indicated that rates should rise within six to nine months to bring inflation back to the 2% target, without backing an increase at the upcoming meeting.
Silver rose 0.6% to US$59.54 an ounce following a 1% decline in the preceding session. Both platinum and palladium posted small gains, while the Bloomberg Dollar Spot Index was largely unchanged.
