Middle East Tensions Keep Gold Prices in Check Ahead of Fed Meeting
Gold prices have held steady at around $4,350 an ounce as tensions in the Middle East continue to escalate. The US military has destroyed five Iranian tankers carrying crude oil near Kharg Island, raising concerns about a potential increase in oil prices and inflation. This could lead to a rate hike by the Federal Reserve, which is scheduled to meet on September 14-15.
According to market strategist Ahmad Assiri of Pepperstone Group Ltd., a softer reading in inflation prints due this week would be a relief for gold traders, supporting the case for holding rates steady. However, an upside inflation surprise could strengthen the case for a rate hike, putting pressure on gold prices.
Gold has been trading in a relatively narrow range of $4,400 since bouncing from a floor near $4,000 in July. Despite headwinds due to tighter monetary policy, many investors still believe that bullion will grind higher as it recovers its value as a portfolio hedge.