Gold rises as interest rate fears ease on US-Iran deal optimism

[BENGALURU] Gold prices edged higher on Wednesday (May 20), as optimism over a potential peace agreement between the United States and Iran tempered concerns around inflation and interest rates staying higher for longer.

Spot gold rose 0.4 per cent to US$4,499.69 per ounce by 8.59 am in Singapore. It had hit its lowest level since Mar 30 in the previous session.

US gold futures for June delivery lost 0.2 per cent to US$4,502.30.

US President Donald Trump said on Tuesday that the United States may need to strike Iran again and that he had been an hour away from ordering an attack before postponing it.

US Vice-President JD Vance said that the United States and Iran have made a lot of progress in their talks and neither side wants to see a resumption of the military campaign.

The current level of interest rates is appropriate for the moment, putting downward pressure on inflation at a time when price pressures remain elevated, Philadelphia Federal Reserve Bank president Anna Paulson said on Tuesday.

She, however, said that it was “healthy” that investors had begun considering scenarios where rates might need to rise.

The US Federal Reserve will avoid cutting rates this year, according to most economists polled by Reuters who largely pushed long-held calls for reductions into next year on hopes the current inflation flare-up is temporary.

Investors are waiting for the minutes of the Fed’s April policy meeting, due later in the day, to gauge the central bank’s monetary policy outlook.

SEE ALSO

Gold extends gain as hopes for Iran truce ease inflation fears

Spot silver rose 1 per cent to US$74.55 per ounce, platinum gained 0.2 per cent to US$1,926.70, and palladium rose 0.9 per cent to US$1,365.50. REUTERS