Gold Price Dips Amidst Ongoing US-Iran Tensions
The price of Gold (XAU/USD) declined to around $4,070 during the early Asian session on Wednesday, as traders weighed the Federal Reserve's interest-rate path amidst uncertainty in the Middle East. The US-Iran talks have made some progress, with US Secretary of State Marco Rubio stating that there has been progress made in discussions with Iran and Oman on getting more ships through the Strait of Hormuz, but no final agreement has been reached.
US Treasury Secretary Scott Bessent said Washington could reach a deal with Tehran by tomorrow to reopen the critical waterway. The easing of US-Iran tensions could ease energy-driven inflation fears and prompt traders to pare bets on further Fed interest-rate increases, which in turn could provide some support to Gold. Markets have priced in nearly a 60% chance that the US central bank will hike rates at the September meeting, according to the CME FedWatch tool.
Nonetheless, the uncertainty in the Middle East remains high as there are no direct talks between the US and Iran. Traders will closely monitor the developments surrounding US-Iran talks. The recent recovery of Gold remains constrained by conflicting drivers, with the metal 'likely to remain caught between improving geopolitical sentiment and ongoing uncertainty over US interest rates.'