Gold Holds Firm at $4,168 as Geopolitical Tensions Offset Hawkish Fed
Gold prices held steady at $4,168.70 per ounce on Thursday, up 1.03 percent on the day, as investors sought safe-haven assets amidst escalating Middle East tensions and a hawkish US central bank.
The geopolitical situation deteriorated sharply over the past 48 hours, with Iranian rocket attacks and US airstrikes on targets inside Iran. Two LNG tankers caught fire off Egypt's Mediterranean coast in suspected drone attacks, causing Brent crude to briefly spike to $91 a barrel.
Gold benefited from this turmoil, as investors traditionally rotate into hard assets during periods of crisis. However, the Federal Reserve's decision to leave its benchmark rate unchanged at 3.50 to 3.75 percent on Wednesday initially provided some relief. New Fed Chair Kevin Warsh reaffirmed the central bank's commitment to bringing inflation back to 2 percent, but refused to offer any forward guidance or hints about future cuts.
The market read between the lines, with yields on ten-year US Treasuries climbing to 4.7 percent and the 30-year bond pushing above 5.2 percent, the highest level since 2007. Central bank buying figures were revised downward for the first quarter, but rebounded in the second quarter with a record 289 tonnes purchased.