Gold Soars Near $4,418 as US-Iran Tensions Escalate Oil Prices
Gold and silver prices surged on Wednesday as investors sought safe-haven assets amid escalating US-Iran tensions. Spot gold traded near $4,417.87, up 1.46%, while spot silver was at $67.37, up 2.46%. The rise in precious metals comes despite elevated Treasury yields, which typically weigh on non-yielding assets like gold and silver.
The US dollar weakened against major currencies, making gold and silver cheaper for buyers holding other currencies and adding support to prices. However, the escalation of tensions between the US and Iran has created uncertainty over Gulf oil supply, potentially offsetting the pressure from higher yields and crude prices.
Markets are currently pricing a 60% chance that the Federal Reserve raises rates by 25 basis points at its meeting on September 15-16. The upcoming inflation readings, including Thursday's Producer Price Index and Friday's Consumer Price Index, will be closely watched to determine the Fed's next move.
Analysts describe the setup for metals as mixed, with higher crude prices and yields typically weighing on gold and silver. However, in the short term, a weaker dollar, safe-haven demand, and uncertainty over Gulf oil supply are currently offsetting that pressure.