Gold is up by 2.03%

Gold held below $4,300 per ounce on Thursday after falling nearly 2% in the previous session, as the US Federal Reserve signaled growing support for interest rate hikes this year. Half of FOMC members indicated that it may be necessary to raise rates this year, consistent with the expectations that core inflation will be higher than expected due to the impact of the war in the Middle East. Meanwhile, new Fed Chair Kevin Warsh declined to offer guidance on the next policy move but emphasized that inflation has remained above the central bank’s 2% target for several years and reaffirmed the Fed’s commitment to bringing price growth under control. On the geopolitical front, the US and Iran digitally signed their interim peace agreement, although it remains uncertain whether Iran has already begun steps to fully reopen the Strait of Hormuz.

Gold prices swung lower to $4,275 per ounce on Wednesday, halting a four session rally after the Federal Reserve held rates unchanged, as expected, and signaled the possibility of a rate hike this year. Half of the FOMC projected that it may be necessary to raise interest rates this year, consistent with the expectations that core inflation will be higher than expected due to the impact of the war in the Middle East. The Fed previously signaled it has leeway to prioritize price stability as the latest labor market data reflected a resilient labor market. Precious metal prices fell as shorter term Treasury yields surged, raising the opportunity cost to allocate in bullion instead of interest-bearing securities. Meanwhile, safe-haven demand was lower as both the US and Iran maintained their intention to sign an agreement to suspend hostilities and restore energy trade on Friday. Major central banks in Europe maintained their rates unchanged, although BoJ raised rates as expected.

Gold traded above $4,300 per ounce on Wednesday and was up more than 2% so far this week, as investors awaited the signing of a US-Iran peace agreement that is expected to restore oil flows through the Persian Gulf, helping ease concerns over inflation and interest rates. The two countries are scheduled to sign an interim deal in Switzerland on Friday, offering Tehran broad economic incentives, including the immediate resumption of its oil exports. Market participants also turned their attention to the Federal Reserve’s upcoming policy decision, where officials are widely expected to leave interest rates unchanged. The meeting will be the first chaired by Kevin Warsh, though he is not expected to submit a "dot" to the FOMC’s quarterly rate projections. Earlier this week, the Reserve Bank of Australia left its benchmark interest rate unchanged at 4.35%, while the Bank of Japan raised its policy rate by 25 basis points to 1%.