Gold steady as investors weigh Middle East risks ahead of Fed decision

[BENGALURU] Gold prices held steady on Wednesday (Mar 18) as investors kept to the sidelines, evaluating the economic impact of the Middle East conflict ahead of the US Federal Reserve’s policy decision.

Spot gold was little changed at US$5,003.77 per ounce as at 8.58 am. US gold futures for April delivery held steady at US$5,008.70.

Oil prices stayed above US$100 a barrel, as renewed Iranian attacks on the United Arab Emirates deepened fears over the global supply outlook.

Israel’s killing of Ali Larijani, Iran’s security chief and the most senior figure targeted since the first day of the US-Israeli war, further escalated tensions. A senior Iranian official said that the country’s new supreme leader had rejected de-escalation proposals passed on by intermediary nations.

US President Donald Trump said that Washington is not ready to leave its military operation in Iran yet, but added, “We will be leaving in pretty much the very near future.”

The Strait of Hormuz, a conduit for a fifth of the world’s oil shipments, remains largely shut, with Iran threatening to attack tankers linked to the US and Israel.

The Strait’s closure kept crude elevated, adding to inflationary pressures by pushing up transport and manufacturing costs. The inflation backdrop typically supports gold as a hedge, but high interest rates dull the metal’s appeal by boosting returns on yield-bearing assets.

The Fed is widely expected to hold rates steady for a second straight meeting when it announces its policy decision later in the day.

Central banks in the UK, euro zone, Japan, Canada, Switzerland and Sweden will also meet this week in their first sessions since the start of the Iran war.

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Gold steady as investors await central bank decisions, weigh Middle East risks

Spot silver rose 0.2 per cent to US$79.46 per ounce. Spot platinum was steady at US$2,124, while palladium lost 0.2 per cent to US$1,598.84. REUTERS