Gold rises as interest rate fears ease on US-Iran deal optimism

Synopsis

Gold prices saw a slight increase as optimism grew regarding a potential US-Iran peace agreement, easing concerns about prolonged high inflation and interest rates. While US President Trump hinted at further action against Iran, Vice President Vance indicated significant progress in talks. Investors await Fed minutes for monetary policy insights.

Gold prices edged higher on Wednesday, as optimism over a potential peace agreement between the United States and Iran tempered concerns around inflation and interest rates staying higher for longer.

FUNDAMENTALS

* Spot gold rose 0.4% to $4,499.69 per ounce by 0059 GMT. It had hit its lowest level ‌since March ⁠30 in ⁠the previous session.

* U.S. gold futures for June delivery lost 0.2% to $4,502.30.

* U.S. President Donald Trump said on Tuesday that the United States may need to strike Iran again and that he had been an hour away from ordering an attack before postponing it.

* U.S. Vice President JD Vance said the United ⁠States and ‌Iran have made a lot of progress in their talks and neither side wants to see a resumption ⁠of the military campaign.

* The current level of interest rates is appropriate for the moment, putting downward pressure on inflation at a time when price pressures remain elevated, Philadelphia Federal Reserve Bank President Anna Paulson said on Tuesday.

* She, however, said it was "healthy" that investors had begun considering scenarios where rates might need to rise.

* The ‌U.S. Federal Reserve will avoid cutting rates this year, according to most economists polled by Reuters who largely pushed long-held calls for reductions ⁠into next year on hopes the current inflation flare-up is temporary.

* Investors are waiting for the minutes of the Fed's April policy meeting, due later in the day, to gauge the central bank's monetary policy outlook.

* Spot silver rose 1% to $74.55 per ounce, platinum gained 0.2% to $1,926.70, and palladium rose 0.9% to $1,365.50.

DATA/EVENTS (GMT)

0600 UK Core CPI YY Apr

0600 UK CPI YY Apr

0600 UK CPI Services MM, YY Apr

0900 EU HICP Final MM, YY Apr

...moreless

...moreless