WASHINGTON (dpa-AFX) - Partially offsetting the losses from the previous session, gold prices have inched higher on Wednesday after a sudden escalation in the Middle East crisis sent crude oil prices higher by more than 6% while investors focused on the upcoming monetary policy announcement by the U.S. Federal Reserve.
Front Month Comex Gold for August month delivery has crept up by $2.90 (or 0.07%) to $4,041.60 per troy ounce.
Front Month Comex Silver for August month delivery has edged lower by $0.553 (or 0.96%) to $57.887 per troy ounce.
Since last weekend, the Middle had East remained free of significant incidents.
However, U.S. Central Command announced this morning that the Islamic Revolutionary Guards Corps of Iran fired several ballistic missiles at a U.S. military base in Jordan.
Centcom successfully intercepted and destroyed all the missiles. After a few hours, the IRGC confirmed launching the strikes.
These latest firings come after a pause on U.S.-Iran attacks for four consecutive nights since last Friday.
U.S. and Saudi forces struck logistics sites of Iran-linked militias across eastern Iraq in coordination with the Iraqi government. The Popular Mobilization Forces, an Iraqi paramilitary group backed by Iran, reported that at least 20 of its members were killed and around 32 wounded in the joint U.S.-Saudi strikes.
Speaking about the sudden reversal of events in the gulf, in a telephone interview with Fox News, U.S. President Donald Trump stated that the U.S. will be hitting Iran hard. However, he asserted that he will let the ongoing talks continue.
Earlier on Monday, Trump stated that he halted last Friday's planned strikes to give diplomacy another chance. Trump sounded optimistic that something good could happen but he stressed that the U.S. would return to a military offensive as a strategy if the negotiations fail to achieve the desired result.
Along with several issues, the crucial point of contention in the ongoing negotiations between the U.S. and Iran is control over the Strait of Hormuz.
Iran held talks with Oman and Saudi Arabia to chart out a plan for controlling the shipping traffic across the strait without involving the U.S.
Oil prices jumped by more than nearly 6.00% after the sudden flare-up in the Middle East, where relative calm prevailed for four days.
In the U.S., the Federal Open Market Committee is set to announce its policy decision today, followed by Fed Chair Kevin Warsh's press conference.
The consumer inflation eased to 3.50% in June from 4.20% in May but well above the Fed's target of 2.00%.
The Fed has stopped offering forward guidance since Warsh took over and hence, investors are left with only the post-meeting conference by Warsh to derive some clues on inflation, economical growth, and policy outlook.
A majority of economists expect the Fed to hold the rates at the current 3.50% to 3.75% range.
Currently, investors are betting on a 31.50% chance of a quarter-basis point interest rate-hike, while the odds on rates being held at the current level stand at 68.50%, according to the CME Group's FedWatch Tool.
Experts are of the view that gold prices are caught between downward pressure due to oil-linked inflationary pressure, which can lead to high interest rates over the upcoming months, against the alternating ceasefire-and-conflict situation which makes the yellow metal a safe-haven.
Despite the unpredictability in the Middle East and the consequences of oil price rise on global economy, gold prices receive strong support from central banks' buying.
In a survey conducted across 76 global central banks in June, the World Gold Council reported that 89% of the lenders expected global gold holdings to shoot up over the next 12 months and 45% anticipated adding the yellow metal to their own reserves.
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