Spot gold fell 0.45% to 4323.20 dollars by 07:20 GMT on Tuesday, while Brent crude rose 1.22% to 101.58 dollars a barrel by 07:22, in moves that reflected investors’ focus on the interest-rate outlook and developments in possible talks between the United States and Iran.
Interest rates weigh on gold
Gold’s decline came as the market lacked strong momentum and investor sentiment was hurt by expectations that interest rates would remain high for longer. Traders are awaiting comments from Federal Reserve officials for clues about the path of monetary policy.
Chris Weston, head of research at Pepperstone, said investors would focus this week on oil prices and comments from Federal Reserve officials for indications of whether the central bank was inclined to raise interest rates again in October.
Although crude oil prices have edged down from their recent highs, any rebound that bolsters inflation expectations would increase focus on interest rates, and gold is likely to continue facing difficulties
The Federal Reserve raised interest rates by a quarter of a percentage point last week and signaled that further increases could come in the months ahead. Alberto Musalem, president of the Federal Reserve Bank of St. Louis, said the U.S. central bank would likely need to raise interest rates further to reduce inflation caused by strong demand and commodity-price shocks that had spread beyond the oil sector, adding that it would be better to act sooner rather than wait.
Other precious metals decline
Spot silver fell 0.1% to 65.99 dollars an ounce, platinum declined 0.6% to 1786.43 dollars, and palladium fell 0.4% to 1296.40 dollars.
Oil posts first gain in 5 sessions
Oil prices rose for their first gain in 5 sessions as investors awaited developments in possible talks between the United States and Iran on the sidelines of this week’s United Nations General Assembly meetings. Brent crude rose 1.22% in early trading to 101.58 dollars a barrel, an increase of 1.2 dollars, while U.S. West Texas Intermediate crude for October delivery rose 0.77% to 93.15 dollars a barrel.
Iran and the United States exchanged threats on Sunday, but U.S. President Donald Trump said he was open to meeting his Iranian counterpart, Masoud Pezeshkian, who is expected to arrive in New York this week to attend the United Nations General Assembly meetings.
Tim Waterer, chief market analyst at KCM Trade, said the rise in West Texas Intermediate and Brent’s strong opening «looks like a traditional short-covering rebound following the recent decline, rather than a shift in market fundamentals». He added: «Traders who had bet on further declines are reducing some risk as the diplomatic events unfold».
Mohsen Rezaei, secretary-general of Iran’s Supreme National Security Council, said Iran had informed mediators of its conditions for resuming negotiations aimed at ending the war with the United States. Waterer said prices were likely to remain rangebound and highly sensitive to headlines until there was clear progress or a setback in diplomatic efforts between the two countries.
