Gold prices continued their ascent during Wednesday’s Asian trading session, marking their fifth consecutive day of gains. A temporary peace accord between the United States and Iran has somewhat alleviated concerns about energy-driven inflation, while investors await the Federal Reserve’s policy decision later today.
As of 01:20 Moscow time, spot gold saw a 0.3% increase, reaching $4,342.56 per ounce, and U.S. gold futures also climbed 0.3% to $4,368.40.
The precious metal has now appreciated for five trading periods in a row, recovering from recent multi-month lows that hovered near $4,000 per ounce.
This positive sentiment has been bolstered by optimism surrounding the U.S.-Iran agreement, which aims to halt hostilities in the Middle East.
The pact, which includes provisions for Iran to resume oil exports and extends a ceasefire during ongoing negotiations, has contributed to a significant drop in oil prices and lessened worries about a renewed inflationary shock.
The reduction in energy costs has prompted investors to lower their expectations for tighter monetary policy, a development that benefits gold, an asset that does not generate income.
Gold has also found support from a simultaneous decline in the U.S. dollar, with the USD Index trading near a ten-day low.
Market focus is now squarely on the Federal Reserve’s initial policy announcement under the leadership of Chairman Kevin Warsh.
While the central bank is widely anticipated to hold interest rates steady, investors will be closely scrutinizing updated economic projections and the so-called “dot plot” for clues regarding the future direction of policy.
Markets are particularly sensitive to any indications that policymakers might see an opportunity for easing policy this year.
A hawkish stance from the Fed could lead to higher Treasury yields and a stronger dollar, potentially capping gold’s recent upward trend.
Underlying demand for gold also remains robust. A recent World Gold Council survey indicates that 45% of central bank reserve managers anticipate increasing their gold holdings over the next year, highlighting the persistent appeal of the metal as a portfolio diversification tool and a hedge against geopolitical risks.
Among other precious metals, silver prices rose by 0.6% to $70.47 per ounce, while platinum saw a 0.4% increase to $1,815.72 per ounce.
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