Gold edges up as rate-hike fears ease; Fed rate decision in focus

[BENGALURU] Gold edged higher on Wednesday (Jun 17), extending gains for a fifth straight session, as optimism around the US-Iran peace deal eased concerns over interest rate hikes, while investors awaited further details on the deal and the US Federal Reserve’s policy meeting.

Spot gold was up 0.4 per cent at US$4,348.93 per ounce, as at 9.07 am in Singapore. US gold futures for August delivery rose 0.3 per cent to US$4,368.40.

Details began to emerge of the US and Iran’s interim agreement to end the war in the Middle East, with US President Donald Trump saying it will rule out a nuclear weapon for Teheran and a US official saying it allows Iran to sell oil upon signing.

The memorandum of understanding signed this week, though yet to be made public, extends a tenuous ceasefire announced in April by another 60 days to allow the warring countries to negotiate a permanent truce.

Investors now await the Federal Reserve policy decision and remarks, the first under chair Kevin Warsh, later in the day, with rates widely expected to remain unchanged.

A majority of Fed policymakers now feel they will need to keep US short-term borrowing costs on hold all year, projections due out on Wednesday are expected to show, with a small number seen pencilling in a rate hike to stop a spike in inflation from getting entrenched in the economy.

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A record 45 per cent of the reserve managers surveyed by the World Gold Council expect to increase their own institutions’ gold holdings over the next 12 months, the international organisation said on Tuesday.

Spot silver rose 0.4 per cent to US$70.47 per ounce, platinum gained 0.9 per cent to US$1,819.45, and palladium was up 0.6 per cent to US$1,360.32. REUTERS