(RTTNews) – Extending the gains from yesterday’s session, gold prices have soared on Thursday as investors assess the possibilities for rate hikes by the U.S. Federal Reserve through this year while U.S. forces completed a wave of attacks on Iran.
Front Month Comex Gold for August month delivery has surged by $68.50 (or 1.70%) to $4,104.80 per troy ounce.
Front Month Comex Silver for August month delivery has also soared by $0.968 (or 1.67%) to $58.855 per troy ounce.
Middle East tensions continue to dictate markets as the scenario alternates between temporary ceasefires and the sudden exchange of attacks.
Yesterday, U.S. Central Command announced successfully intercepting and destroying ballistic missile launched from Iran on U.S. bases in Jordan. Iran’s Islamic Revolutionary Guards Corps acknowledged targeting Jordan.
Prior to this, partnering with Saudi Arabia, the U.S. military struck Iran-backed militias in Iraq in coordination with Iraqi authorities.
Today, U.S. Central Command announced that U.S. forces completed a “heavy wave of strikes” against Iranian targets in response to Iran’s attempted attacks on U.S. bases in the gulf region.
The June 17 Memorandum of Understanding signed between the U.S. and Iran to explore ways to resolve disputes through negotiations turned void after both nations re-started their mutual attacks in less than a month of the signing.
After nearly two weeks of ceaseless attacks, last Friday, U.S. President Donald Trump ordered the U.S. military to halt its attacks on Iran. On its part, Iran agreed to stop its strikes as long as the U.S. refrained from its military endeavor.
However, yesterday’s escalation has brought back tension to the markets, renewing concerns of oil-linked inflation.
Yesterday in the U.S., in line with the predictions of market participants, the U.S. Federal Reserve held the benchmark rates in the 3.50% to 3.75% range. Of note, three of the 12 policymakers dissented with the Fed’s decision.
U.S. Federal Reserve Chair Kevin Warsh reiterated his commitment to curtail inflation in the 2% range.
Today, data released by the U.S. Bureau of Economic Analysis revealed that the Personal Consumption Expenditure index increased 3.70% year over year in June, softening from 4.10% in May. On a month-on-month basis, the index decreased 0.10% in June after a 0.50% rise in May.
On an year-on-year basis, the core PCE index rose by 3.30% in June, while on a month-on-month basis, it increased by 0.10% in June from the previous month.
According to the U.S. Labor Department, for the week ending July 25, the number of people claiming unemployment benefits were at 197,000, rebounding by 9,000 from the previous period. The numbers were below expectations of 200,000.
Continuing jobless claims decreased to 1,782,000 for the week ending July 18 from 1,789,000 of the previous week.
Economists attribute the slowdown in inflation to the dip in energy prices due to the brief halt in the U.S.-Iran war after the signing of the MoU following which Iran reopened the Strait of Hormuz.
The numbers indicate that the Fed can withhold increasing the interest rates aggressively. Warsh had remarked that the Fed was looking at a broader set of inflation numbers other than the PCE.
In the absence of any policy guidance by Warsh, attention is now shifting to the developments in the Middle East from the ongoing negotiations between the U.S. and Iran.
The U.S. dollar index was last seen trading at 100.04, down by 0.75 (or 0.74%) today.
Currently, investors are betting on a 55.40% chance of a quarter-point interest rate-hike in the upcoming meeting of the U.S. Federal Reserve on September 15-16, while the odds on rates being held at the current level stand at 44.60%, according to the CME Group’s FedWatch Tool.
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