Gold prices edged higher on Tuesday morning as investors assessed the economic fallout from the Middle East conflict ahead of a series of central bank decisions this week.
Gold futures (GC=F) rose 0.5% to $5,025.10 a troy ounce, while spot prices bounced climbed 0.7% to $5,023.53 at the time of writing.
“Gold prices pulled back in the first 24 hours of trade this week. That seems to echo the markets’ positive response to Iran’s foreign minister’s comments… In response, crude oil pulled back, yields ticked lower, and the US dollar gave back some recent gains as stocks rose,” said Ilya Spivak, head of global macro at Tastylive.
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Oil, however, remained above $100 a barrel as the US Israeli war against Iran kept the Strait of Hormuz largely shut.
“Watching news flow from the US Iran war and what it does to crude oil remains a key input, but the upcoming Fed meeting also has big catalyst potential. Gold may weaken if the central bank strikes a relatively hawkish tone,” Spivak added.
The US Federal Reserve is widely expected to leave interest rates unchanged in the 3.5% to 3.75% range for a second consecutive meeting on Wednesday.
On Thursday, the Bank of England is due to announce its latest interest rate decision, having held the rate at 3.75% in February – after cutting rates six times since August.
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