(Bloomberg) — Gold held gains as increasing oil supplies from the Middle East and a decline in bond yields eased pressure on the US Federal Reserve to hike interest rates this month.
Bullion was trading around $4,165 an ounce, after rising 0.6% the day before. Oil flows from the region are at around 80% of pre-conflict volumes, Shell Plc Chief Executive Officer Wael Sawan said on Tuesday, and several big banks and shipping analytics firms have made similar estimates.
Still, risks remain. Tehran has increased the pace of attacks on tankers in the Strait of Hormuz in recent days, and leading oil executives warn the world is running out of stopgaps to manage the impact as the US-Iran war extends into an eight month.
Treasury yields pulled back on Tuesday as oil stabilized, after longer-dated tenors had pushed to fresh multi-decade peaks the day before. Wall Street traders drove stocks to all-time highs on growing bets that corporate America will be able to weather inflationary pressures.
Fed officials have been talking down the likelihood of an imminent rate hike, and traders are now pricing in a less than one-in-five chance of an increase at its October meeting, down from about 40% a week ago. Minutes of the central bank’s September meeting, where borrowing costs were raised for the first time in three years, are due later on Wednesday and will provide the next clues on the path forward.
While the yellow metal is down more than a fifth since the US-Iran conflict began in late February, central bankers gathering in Italy this week stressed its increasingly strategic role in diversifying reserves as geopolitical uncertainties boost its appeal as a safe-haven asset.
Spot gold was little changed at $4,167.05 an ounce at 7:43 a.m. in Singapore. Silver was steady at $61.34. Platinum and palladium were stable. The Bloomberg Dollar Spot Index, a gauge of the US currency, was flat after falling 0.2% the previous session.
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