Gold Climbs as Markets Monitor US-Iran Diplomacy

Gold rose to $4,080 per ounce on Tuesday as investors assessed diplomatic efforts to ease US-Iran tensions and their potential impact on oil prices, inflation, and the Federal Reserve's policy outlook. US Treasury Secretary Scott Bessent said a deal to reopen the Strait of Hormuz could be reached as soon as today or tomorrow, while Qatari Foreign Ministry spokesperson Majed al-Ansari said negotiations remain ongoing, with de-escalation and reopening the vital waterway as the top priorities. The developments prompted markets to lower expectations for a September Fed rate hike, with the implied probability falling to 57%. Investors now await upcoming US labor market data for further clues on the Fed's policy path. New York Fed President John Williams said inflation continues to trend gradually lower but reiterated that policymakers would not hesitate to raise rates if price pressures persist.

Gold traded around $4,050 an ounce on Tuesday, remaining within the $4,000–$4,100 range that has defined trading over the past several weeks, as investors continued to weigh uncertainty surrounding the Federal Reserve's interest rate outlook while monitoring developments in the Middle East for signs of progress toward a diplomatic resolution to the Iran conflict. New York Fed President John Williams said inflation still appears to be on a gradual path lower but stressed that the Fed would not hesitate to raise rates if price pressures persist. Meanwhile, the three policymakers who dissented from last week's decision to leave rates unchanged reiterated that additional tightening is warranted. Markets are currently pricing in a 63% probability of a September rate hike, with attention now turning to US labor market data. Elsewhere, conflicting signals from the US and Iran over negotiations to end the conflict added to uncertainty, helping support demand for safe-haven assets.

Gold steadied around $4,050 an ounce on Tuesday, trading in a narrow range as investors tracked developments in US-Iran talks for clues on the potential reopening of the Strait of Hormuz, while continuing to evaluate the outlook for US Federal Reserve monetary policy. President Donald Trump said his offer of talks represents Tehran’s final opportunity to reach a deal and expressed confidence that Hormuz will reopen soon. Iran, however, denied that any direct talks with the US are underway, though it said discussions with Oman aimed at increasing shipping through the strait are making progress. Meanwhile, markets are pricing in about a 65% chance of a 25 basis point Fed rate hike in September after the central bank left interest rates unchanged in July. Bank of New York Fed President John Williams said monetary policy remains well positioned, adding that inflation is expected to ease during the second half of the year.