July 24 (Reuters) – Gold rose on Friday as Brent crude retreated from above $100 a barrel, while investors assessed developments in the Middle East conflict and their implications for inflation ahead of the U.S. interest rate decision next week.
Spot gold was up 0.6% at $4,073.23 per ounce by 11:50 a.m. EDT (1550 GMT), after falling about 2% in the previous session. Prices were up 1.4% for the week so far, supported by dip-buying earlier in the week.
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U.S. gold futures for August delivery gained 0.6% to $4,075.90.
“Gold and silver are carving out a base around $3,950 and $55, respectively, despite relentlessly higher yields. While a stop-loss move below can’t be ruled out on a sharp war escalation, gold feels ready to move back higher … A Fed clearly on hold next week would help,” said Tai Wong, an independent metals trader.
Bullion has fallen about 23% since the U.S.-backed war with Iran began in late February, pressured by expectations that war-driven inflation could keep interest rates higher for longer.
While gold is seen as a hedge against inflation, higher rates typically weigh on the non-yielding metal.
Investors now await the U.S. Federal Reserve’s policy meeting outcome next week, when it is largely expected to keep rates unchanged.
Traders are pricing in about an 80% chance of a U.S. rate hike in September, according to the CME FedWatch Tool. FEDWATCH
“Recent strength in bullion appears driven largely by dip-buying and short covering. This follows the sharp correction from record highs earlier this year … Elevated oil prices and rising yields are likely to cap any recovery, leaving $4,000 as the key near-term level to watch,” analysts at ING said in a note.
Among other metals, spot silver rose 1.9% to $58.77 per ounce, platinum fell 0.5% to $1,592.89, and palladium added 0.2% to $1,259.42.
Reporting by Noel John in Bengaluru; Editing by Vijay Kishore and Alan Barona
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Source: Original Article
