By: Economy Middle East

Gold prices rose on Wednesday as investors weighed inflation risks and the outlook for interest rates following fresh U.S. strikes on Iran, which pushed oil prices and the dollar higher ahead of the release of the Federal Reserve’s June meeting minutes.

Spot gold gained 0.50 percent to $4,126.32 per ounce by 4:56 GMT, recovering after earlier falling to its lowest level since July 2. Meanwhile, U.S. gold futures for August delivery declined 0.51 percent to $4,136.34 per ounce.

In the UAE, gold rates rose, with 24-carat gold gaining AED3.5 to AED497 and 22-carat gold rising AED3.25 to AED460.25.

In addition, 21-carat gold edged AED3 higher to AED441.25, while 18-carat gold ticked up AED2.75 to AED378.25.

Meanwhile, 14-carat gold gained AED2 to AED295.

Renewed Mideast tensions pressure gold prices

Gold prices fell 1.6 percent on Tuesday after renewed U.S.-Iran tensions lifted the dollar and intensified concerns over inflation and the future path of interest rates.

The U.S. launched additional strikes on Iran and withdrew exemptions that had allowed some Iranian oil exports to continue, following Tehran’s attacks on vessels in the Strait of Hormuz.

U.S. crude prices climbed nearly 3 percent in early trading, Treasury yields moved higher and the dollar remained near its strongest levels of the week against most major currencies as the strikes heightened pressure on an already fragile ceasefire.

The escalation cast uncertainty over a June framework agreement between Washington and Tehran, raising doubts over whether both sides can move toward a broader deal. However, the U.S. indicated that diplomatic talks with Iran remained ongoing.

Markets await Fed’s June meeting minutes

Investors are now turning their attention to the release of the Federal Reserve’s June meeting minutes on Wednesday for further signals on the central bank’s interest rate outlook.

Markets have raised their expectations for a Federal Reserve rate hike in September, with the probability climbing to more than 63 percent, up from around 57 percent a day earlier, according to the CME FedWatch tool.

The shift reflects growing concerns that persistent inflationary pressures and recent market developments could prompt the Fed to maintain a tighter monetary policy stance for longer.

Monetary policy expectations have been a key driver of gold prices since mid-June. The precious metal recently found support after weaker payroll data reduced expectations for further rate increases this year. However, the Fed maintained a hawkish stance at its June meeting, with several policymakers favoring higher rates, a development that could weigh on non-yielding assets such as gold.

The minutes are expected to provide additional insight into policymakers’ views, while markets will also monitor the tone of communications under incoming Fed Chair Kevin Warsh.

Other precious metals

As gold prices rose, the broader precious metals market saw mixed movement. Spot silver climbed 0.8 percent to $60.47 per ounce, while platinum edged down 0.3 percent to $1,635.45 and palladium declined 0.6 percent to $1,268.64.