WASHINGTON (dpa-AFX) - Gold prices have edged lower on Wednesday, partially offsetting the gains from the previous two sessions, as investors await the U.S. Federal Reserve's interest rate announcement while crude oil prices skyrocketed due to supply concerns following reports of possible U.S. attacks on Iran.
Front Month Comex Gold for December delivery has moved lower by $22.00 (or 0.54%) to $4,052.60 per troy ounce.
Front Month Comex Silver for December delivery has slumped by $0.828 (or 1.52%) to $53.685 per troy ounce.
Later today, the U.S. Federal Reserve is set to announce its latest decision on interest rates.
Though money markets are anticipating a hold by the Fed (in the current 3.75% to 4.00% range), to gather clues on any further rate hikes, traders are awaiting the comments by U.S. Fed Chair Kevin Warsh after the rate announcement.
Currently, inflation remains above the Fed's target of 2.00%. Driven by high energy prices, the U.S. Consumer Price Index increased 3.70% annually in September. Core CPI (which excludes food and energy) stood at 2.60%, up 0.30% from August.
Workers who lose jobs are finding it difficult to find new jobs.
Amid these competing pressures, the Fed's decision assumes more significance.
Middle East tensions continue without any sign for a peace agreement between the U.S. and Iran so far.
Last week, the New York Times reported that the U.S. and Israel are on the verge of recommencing their attacks on Iran after the November U.S. midterm elections.
On Monday, CNN echoed the same threat, stating that U.S. forces are preparing for attacks that could be on a larger scale with an intent to destabilize Iran's military's capacity to recover and strike back.
Today, in a similar vein, the Wall Street Journal reported that the U.S. has already asked several Arab nations to be prepared for a renewal of U.S. attacks on Iran that will start after the elections.
Yesterday, during a meeting with Iran's security chief, Iran's Supreme Leader Mojtaba Khamenei stressed that Iran's interests must be preserved in any negotiation with the U.S.
U.S. President Donald Trump, who has been maintaining a conflicting stand on a resolution, had acknowledged that diplomatic measures are being pursued but cautioned that the U.S. could let Iran deteriorate under the pressure of sanctions. Speaking of attacks, Trump stated that anything is possible.
A Qatari delegation visited Iran on Sunday to discuss regional peace and security.
Today, Reuters reported that Iran has been presented with a new deal to end the war. Citing a senior Iranian official, the report mentioned that the ideas put forward by Qatar are unacceptable to Iran. However, a response from Iran is expected by the weekend.
Iran's Foreign Minister Abbas Araghchi has remarked that while Iranian armed forces are fully prepared to defend the homeland, Iran continues to give diplomacy a chance to succeed. He also stated that Iran is in close contact with intermediaries.
Uncertainty over gulf peace is also due to the recent escalation of attacks on Saudi Arabia by Houthi militants of Yemen. Egypt stepped up coordination with Saudi Arabia to contain the regional tensions.
WTI crude oil for December was last seen trading, up by $3.13 (or 3.13%), at $103.03 per barrel.
On the economic front, the Mortgage Bankers Association of America revealed that the Purchase Index in the U.S. increased to 134.10 on October 23 from 129.20 of the previous week.
Today, the U.S. dollar index was last seen trading at 102.25, down by 0.06 (or 0.06%) today.
According to the CME Group's FedWatch Tool, currently investors are betting on a 7.2% chance of a 25-basis-point rate-hike at today's Fed meeting while the odds on rates being held at the current level stand at 92.8%.
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