Gold holds gain as Trump’s war comments ease inflation jitters

[SINGAPORE] Gold held a gain as US President Donald Trump appeared to rule out prolonged military action in the Middle East, easing inflationary concerns driven by a renewed spike in energy prices. 

Bullion was trading around US$4,385 an ounce, after rebounding 1 per cent the day before to snap a three-day decline.

Oil’s rally slowed after Trump said the latest attacks on Iran would likely be short-lived. The fresh fighting had rekindled fears of an open-ended war that would fuel inflation, a headwind for non-yielding bullion. 

The US dollar edged lower on Wednesday (Sep 2) following a sharp increase in the yen, which had traders on alert for any sign that authorities will take further action to support the Japanese currency.

A weaker greenback can increase gold’s appeal for investors holding foreign currencies. 

US Federal Reserve Bank of New York president John Williams said there is evidence inflation continues to ease as the impact of tariffs fades while higher energy prices are not spreading to other services.

That tempered expectations of a interest rate hike, which was further supported by data showing US companies added jobs at a more moderate pace in August. 

That came after Fed chairman Kevin Warsh’s hawkish speech on Friday raised expectations the US central bank may need to lift rates to contain inflation when it meets in two weeks. 

Spot gold rose 0.1 per cent to US$4,386.94 an ounce at 7.56 am in Singapore. Silver was up 0.1 per cent at US$65.38 an ounce. Platinum and palladium were little changed.

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The Bloomberg Dollar Spot Index, a gauge of the US currency, was flat after falling 0.2 per cent the previous session. BLOOMBERG