US-Iran Conflict and Fed Signals Boost Gold Prices

Gold prices are on track to end their four-month slump as investors reassess the impact of the US-Iran conflict and parse Federal Reserve signals for clues on inflation and interest rates.

Spot gold inched 0.2% lower at $4,096.29 per ounce, but was headed for a weekly rise of 1.1%. US gold futures for August delivery gained 0.1% to $4,094.10, indicating that the metal is poised to gain more than 2.2% this month, its sharpest gain since February.

The Federal Reserve's decision to leave interest rates unchanged at its latest policy meeting has reduced markets' expectations of a rate hike in September from about 80% prior to the meeting to 63%, according to CME Group's FedWatch tool. The easing is likely temporary as renewed hostilities in the Middle East raise oil prices, which could further boost gold demand.