Gold Rally Eases Ahead of Fed Decision
Gold prices held steady on Wednesday (June 17th) after rising for four consecutive sessions, as the market awaited the signing of an interim peace deal between the US and Iran. The agreement is seen as easing global inflationary pressures that had previously risen due to the war and energy supply disruptions.
Bullion traded near $4,330 per ounce after rising more than 6% since Thursday. At 10:49 a.m. London time, gold was nearly flat at $4,327.35 per ounce, while the Bloomberg Dollar Spot Index was also relatively stable.
Details of the US-Iran deal are beginning to emerge, including provisions that would allow Iran to immediately sell oil and gradually gain access to frozen assets. US President Donald Trump stated that the Strait of Hormuz would be fully reopened after the deal was signed on Friday, although some European allies remained cautious about implementation risks.
The reopening of Hormuz is a key factor for the precious metals market because the waterway is directly linked to global energy supply flows. If oil supplies return to normal, energy price pressures could ease and help lower inflation expectations, reducing the need for central banks to maintain high interest rates for longer.
This transmission supports gold because the metal offers no yield. As inflationary pressures from energy decline and interest rate expectations become more manageable, the opportunity cost of holding gold tends to decrease. However, room for upside remains limited by investor caution ahead of the Federal Reserve's decision.
Standard Chartered analysts believe the prospect of a US-Iran deal could help gold find support more quickly. However, volatility is still possible as prices briefly fell below their 200-day moving average earlier in the month, leaving the market sensitive to technical changes and policy signals.
Market focus now shifts to the Fed's first policy decision under new Chairman Kevin Warsh on Wednesday. Interest rates are expected to remain on hold, but investors will be closely monitoring the Fed's assessment of inflation risks. In other metals, silver traded just below $70 per ounce after rising 10% in the last four sessions, while platinum and palladium weakened. (arl)
Source: Newsmaker.id
