(Bloomberg) — Gold wavered as traders assessed the Federal Reserve’s interest-rate path and the status of negotiations to end the war in Iran.
Bullion swung between a gain of 0.4% and a loss of 0.7%. Talks aimed at reaching a deal to end the US-Iran war continue, but reports that an agreement is close are inaccurate, according to a diplomat involved in negotiations. The dollar and bond yields pushed lower as oil pared losses following an earlier drop sparked by an unconfirmed report that a breakthrough could come as soon as this week.
Energy prices remained elevated, sustaining inflation concerns that could keep the US central bank on track to raise rates again later this year. Tighter monetary policy is a headwind for bullion, which doesn’t carry interest.
Gold has traded in a tight range in October as investors calibrate the Fed’s next move after it increased rates for the first time since 2023 in September. Traders now price in a 15% chance of another quarter-point increase at the Fed’s Oct. 27-28 meeting, after comments last week from Chairman Kevin Warsh were interpreted as reinforcing expectations for a pause. Warsh stopped short of signaling a decision, saying he wouldn’t “prejudge” meetings, while most Fed officials have projected at least one more increase this year.
Inflation remains above the central bank’s 2% target, leaving investors focused on whether policymakers pause this month before resuming tightening later in the year.
Spot gold fell 0.4% to $4,123.97 at 12:32 p.m. in London. Silver rose 1.2% to $57.77, while platinum advanced and palladium fell. The Bloomberg Dollar Spot Index, a gauge of the US currency’s strength, edged down 0.2%.
–With assistance from Yihui Xie and Jack Ryan.
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