Gold Climbs as Rate-Hike Bets Ease Ahead of Fed Decision

Gold rose for a fifth straight session on Wednesday as optimism over a U.S.-Iran peace deal curbed expectations for U.S. interest rate hikes, while investors awaited further details on the accord and the Federal Reserve’s policy meeting.

Spot gold climbed 0.3% to $4,341.12 an ounce by 0230 GMT, approaching a one-week peak reached on Monday. U.S. gold futures for August delivery climbed 0.2% to $4,361.10.

Details of a U.S.-Iran temporary deal to end the ⁠Middle East conflict are emerging, with U.S. President Donald Trump stating it would rule out ​a nuclear weapon for Tehran and a U.S. official suggesting it would allow Iran to sell ​oil once signed.

Oil prices stayed near a three-month low after news that Iranian petroleum could soon enter world markets, soothing inflationary fears.The decline in oil prices has taken some of the upward pressure off rates and dampened expectations for rate hikes. “But the rally (in gold) is losing some momentum with all eyes on the Fed’s monetary policy announcement,” Ilya Spivak, global macro head at Tastylive, said.

Investors now look to the U.S. Fed policy decision and statements scheduled later in the day, with rates largely expected to remain on hold. “This is the first FOMC meeting led by Kevin Warsh and traders still seem uncertain as to how he would balance a hawkish record, increasing inflation and pressure from a White House calling for a dovish pivot,” Spivak said.

Gold is not attractive when rates are high, because it does not pay interest.“Longer term, structural support for (gold) is expected to remain, underpinned by continued Asian demand and ongoing central bank buying as a hedge against geopolitical and policy risks,” Westpac analysts said in a research note.

Other precious metals also gained with spot silver up 0.3% to $70.38 per ounce, platinum rose 0.5% to $1,812.80 and palladium was up 0.3% at $1,355.65.