WASHINGTON (dpa-AFX) - Partially offsetting yesterday's slump, gold prices have edged higher on Friday following a Goldman Sachs estimate indicating more central bank purchases even while concerns of a near-term rate hike in the U.S. due to the ongoing gulf war weighed on the yellow metal.
Front Month Comex Gold for August month delivery has inched higher by $27.10 (or 0.68%) to $4,019.20 per troy ounce.
Front Month Comex Silver for August month delivery has advanced by $0.164 (or 0.29%) to $56.160 per troy ounce.
Today, the concerns of a widespread war in the Middle East increased as U.S. and Iran deepened their attacks.
Iran accused the U.S. of striking civilian infrastructure, including bridges, airports, power facilities, and a train station.
Iran's Islamic Revolutionary Guards Corps hit back at U.S. assets in Bahrain, Jordan, Kuwait, Qatar, and Oman.
To end a war that started on February 28, the U.S. and Iran signed a Memorandum of Understanding on June 17 whereby both nations halted all attacks and agreed to adopt diplomatic approaches to resolve disputes.
Iran reopened the Strait of Hormuz which it had shut at the start of the war and the U.S. lifted its naval blockade on Iranian ports.
After a few projectile and drone attacks on vessels transiting the Strait of Hormuz, U.S. forces carried out cycles of attacks over Iran. Iran counter-attacked by striking at the U.S. bases in its neighboring nations.
As the mutual strikes rendered the MoU inoperative, Iran announced the closure of the strait while the U.S. reimposed its blockade on Iranian ports.
The Iranian energy ministry advised citizens to reduce their electricity usage after the U.S. struck Iranian energy facilities in the south. Iran warned it would target civilian infrastructure across the Middle East if the U.S. attacks Iran's infrastructure.
Despite the renewed hostilities, both the U.S. and Iran insisted that they remain open to a diplomatic settlement and admitted that channels for talks are still open.
On Wednesday, in an interview with Joe Rogan, U.S. Vice President JD Vance stated that while the U.S. uses the military option as a tool to solve the problem, diplomacy is another tool.
On Thursday, the White House Press Secretary Karoline Leavitt stated that U.S. President Donald Trump is open to diplomacy with Iran and added that the U.S. is in talks with Iran.
Despite internal resistance from hardliners for continuing talks with the U.S., Iranian Parliament's Speaker Mohammad Bagher Ghalibaf stated that negotiation is a tool to achieve Iran's interests and not capitulation.
Shipping traffic across the strait has reduced drastically. The supply disruption and the uncertainty on how the crisis will unfold offered an upward momentum to crude oil prices.
With inflationary concerns returning to the markets, gold prices came under pressure.
Currently, investors are betting on a 14.40% chance of a quarter-basis-point interest rate-hike in the upcoming meeting of the U.S. Federal Reserve on July 28-29 while the odds on rates being held at the current level stand at 85.60%, according to the CME Group's FedWatch Tool.
A Goldman Sachs survey recorded today that despite market expectations of a hawkish U.S. Federal Reserve, the relentless gold-buying by global central banks is offering a supporting cushion for the metal's prices.
The bank estimates that central banks purchased 81 metric tons of gold in May, with a three-month average monthly purchase volume of 67 metric tons, far exceeding the average of 17 metric tons before 2022.
Goldman Sachs predicts that the average monthly gold purchases will be 50 metric tons in 2026 and 40 metric tons in 2027. These estimates contributed to a rebound in gold prices.
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