Gold edged higher, holding firmly above the key resistance point of $4,000 an ounce even as the widening conflict in the Middle East fuels expectations for tighter monetary policy.
Bullion inched above $4,060 an ounce, having fallen as much as 0.7% earlier in the session and 2% the day before. Prices are still up on the week.
Oil prices retreated Friday after hitting $100 a barrel in the previous session, with the Iran war in a new phase of escalation after the effective collapse of a truce. Crude’s recent rally has stoked inflationary pressures, which alongside a seemingly resilient US labor market increase the possibility of interest-rate hikes. Higher borrowing costs are a headwind for non-yielding bullion.
Swap traders currently see a roughly 30% chance the Fed will lift rates at a meeting next week. At least one hike is priced in by the end of the year.
“Despite strongly rising oil prices and the resulting renewed concerns about interest rates, the price has held above $4,000 per troy ounce,” analysts at Commerzbank AG wrote in a note. “Against this background, next week’s meeting of the US Federal Reserve is unlikely to move the gold price much.”
Adding to the uncertainty, the US announced it will collect duties of 10% to 12.5% on imports from most major trading partners, alleging forced labor in their supply chains. It’s President Donald Trump’s broadest move yet toward restoring his protectionist tariff regime since his earlier levies were struck down by the Supreme Court.
Gold has largely hovered around $4,000 since late June, which some traders see as a key support level. It’s down by roughly a quarter since the US and Israel launched strikes on Iran in late February, helping to end a multiyear bull run that had carried the metal to a record near $5,600 the month before.
Spot gold edged up 0.3%% to $4,061.27 an ounce as of 12:23 p.m. in London. Silver was up 1.4% at $58.40 an ounce after falling 3.6% in the prior session. Platinum rose 0.6%, while palladium held steady. The Bloomberg Dollar Spot Index was little changed.
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