Gold prices edged higher in early Asian trading on Wednesday as U.S. Treasury yields eased from recent highs, while investors awaited the release of the Federal Reserve’s latest meeting minutes for further clues on interest rate policy.
Gold Gains as Treasury Yields Retreat
Spot gold rose 0.2% to $4,342.33 per ounce by 0030 GMT after falling nearly 2% in the previous session. Meanwhile, U.S. gold futures for December delivery declined 0.6% to $4,396.30.
U.S. Treasury yields moved lower after reaching recent highs during a global bond selloff that pushed long-term borrowing costs in major economies toward their highest levels in decades.
Lower yields can support gold prices by reducing the opportunity cost of holding the non-yielding asset.
Middle East Tensions Keep Oil and Inflation Risks in Focus
Geopolitical developments continued to influence markets as President Donald Trump said no talks were taking place with Iran and maintained that the Strait of Hormuz was open, while Iran continued to claim that the critical shipping route remained closed.
The reduced likelihood of a deal to end the nearly six-month conflict contributed to higher oil prices.
Rising energy prices could strengthen the case for higher interest rates to contain inflation, even as recent U.S. economic data showed unexpected employment declines, softer inflation and weaker July retail spending.
Markets Watch Federal Reserve Policy Signals
The Federal Reserve is scheduled to release minutes from its latest Federal Open Market Committee meeting at 1800 GMT.
Traders are currently pricing in a 65% probability that the central bank will keep rates unchanged and a 35% chance of a rate hike in September, according to the CME FedWatch Tool.
Although gold is often viewed as a hedge against inflation, higher interest rates typically pressure gold prices by strengthening the U.S. dollar and making yield-bearing assets more attractive.
Other Precious Metals Move Mixed
Elsewhere in precious metals, spot silver declined 0.5% to $62.99 per ounce. Platinum gained 0.3% to $1,717.03, while palladium fell 0.3% to $1,286.73.
