Gold prices rose for a fifth consecutive session on Wednesday as investors scaled back expectations of a US interest rate increase following signs of progress in talks between Washington and Tehran.
Spot gold gained 0.3% to $4,341.12 an ounce by early trading, remaining close to a one-week high reached earlier this week. US gold futures for August delivery also advanced 0.2% to $4,361.10.
Market sentiment was influenced by emerging details of an interim agreement between the United States and Iran aimed at ending the conflict between the two countries. President Donald Trump said the deal would prevent Iran from obtaining a nuclear weapon, while a US official indicated that Tehran would be permitted to resume oil sales once the agreement is signed.
The prospect of additional Iranian oil entering global markets kept crude prices near a three-month low, easing concerns about inflation and reducing expectations that the Federal Reserve may need to tighten monetary policy further.
Analysts said lower oil prices have helped weaken forecasts for another interest rate increase, although attention is increasingly turning to the Federal Reserve’s policy decision later on Wednesday.
Markets widely expect the US central bank to leave interest rates unchanged. Investors are also watching for guidance from Federal Reserve Chair Kevin Warsh on the outlook for inflation and future policy moves.
According to CME Group’s FedWatch tool, traders now see a 59% chance of a US interest rate increase in December, down from around 70% a week ago before news of the US-Iran agreement emerged.
Gold typically becomes less attractive when interest rates rise because the metal does not provide interest income.
Analysts at Westpac said long-term support for gold is expected to remain in place, driven by strong demand from Asian buyers and continued purchases by central banks seeking protection against geopolitical and political risks.
Other precious metals also recorded gains. Silver rose 0.3% to $70.38 an ounce, platinum added 0.5% to $1,812.80, and palladium increased 0.3% to $1,355.65.
