Gold steadies as soft US inflation, Iran war risk cloud US Fed rate outlook

GOLD steadied, as traders weighed softer-than-expected inflation data against escalating attacks in the Middle East for clues to the US Federal Reserve’s interest-rate path.

Bullion was near US$4,060 an ounce in early trading on Thursday (Jul 16), after ending the previous session up 0.2 per cent. The Bloomberg Dollar Spot Index and Treasury yields fell on Wednesday after an underlying gauge of US producer price inflation showed pressures were abating before the latest flare-up in the Iran war.

The June numbers, however, did not reflect the latest round of hostilities. An interim peace deal signed in June has all but collapsed, with Washington launching airstrikes for a fifth consecutive day and President Donald Trump pledging to intensify the bombardment until Teheran stops attacking ships and opens the Strait of Hormuz.

Gold has traded close to US$4,000 an ounce in recent weeks after losing 14 per cent in the second quarter of 2026, its worst showing since 2013. That retreat was driven by expectations the US Fed could hike interest rates to manage inflationary pressures driven by the war, creating headwinds for non-yielding bullion.

The unexpectedly sharp slowdown in June inflation has perhaps bought the US central bank more time to consider its options. However, with the conflict heating up again, any reprieve may prove short-lived. Oil climbed for a fourth day on Thursday.

US Fed Chairman Kevin Warsh has made it clear that rates are among the options to keep inflation within a promised 2 per cent target but has tempered hawkish comments with a willingness to be patient. In an exchange with lawmakers on Wednesday, he pushed back on commentary that surging investment into artificial intelligence is stoking inflation.

SEE ALSO

Economic activity rising and inflation easing slightly: US Fed survey

US strikes Iran again as Teheran warns of ‘existential war’ with America

Trump pledges to escalate attacks until Iran relents on Hormuz

Oil prices make small gain on smaller US inventory draw

US stocks: Wall Street ends higher on cool inflation data, strong earnings

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Spot gold was little changed at US$4,060.30 an ounce at 6.45 am in Singapore. Silver was also steady, at US$57.81 an ounce. Platinum gained, while palladium fell marginally. The Bloomberg Dollar Spot Index was flat after dropping 0.3 per cent in the previous session. BLOOMBERG