(RTTNews) – Adding to the two previous sessions of gains, gold prices have moved higher on Friday as inflationary pressures eased due to a slump in crude oil prices as investors anticipate a possible resolution to the Iran war through the upcoming meeting between U.S. President Donald Trump and gulf leaders despite Trump hinting at a possible re-escalation with Iran.
Front Month Comex Gold for October delivery has edged higher by $22.20 (or 0.51%) to $4,387.70 per troy ounce.
Front Month Comex Silver for October delivery has soared by $1.090 (or 1.66%) to $66.650 per troy ounce.
Over the past few days, twin conflicts in the Middle East, the U.S.-Iran war which began in late February and the recent Saudi Arabia-Houthi conflict, have deepened the concerns of an expansive war in the gulf and a protracted delay in the resumption of Arab oil trade.
Last week, the Iran-backed Houthis launched drone attacks that damaged Saudi Arabia’s crucial East-West pipeline.
After alternating his stance on negotiations with Iran, Trump once again claimed that Iran is seeking a deal with the U.S. However, Iran categorically rejected the claim, after which expectations for direct peace talks lowered.
Rising supply-related concerns due to these escalations supported crude oil prices.
On Wednesday, Axios reported that Trump is set to hold a meeting with leaders of six gulf nations, namely Saudi Arabia, the United Arab Emirates, Qatar, Bahrain, Kuwait, and Oman, in New York on Tuesday to discuss the next phase in the ongoing U.S.-Iran war.
Prior to that, Trump stated that the U.S. was hopefully towards the end of its war with Iran. Energy market participants increased their bets on a possible resumption of dialogue process.
However, late yesterday, Axios reported Trump as stating that he had a big judgment to make regarding Iran, re-triggering concerns of a broad-scale escalation.
Calling it a big decision, Trump even suggested the possibility of the U.S. annihilating Iran but declined to commit on whether he will make a call before or after the mid-term elections in the U.S. scheduled to be held in November. Trump warned that anything could happen.
Despite the warnings, Trump stated that he preferred to hear directly from the allies of the U.S. in the Middle East before arriving at a decision.
Investors are optimistic that the discussions could result in de-escalation of tensions and pull the U.S. and Iran back to the negotiating table. As a result, crude oil prices moved sharply lower.
WTI crude oil for October delivery was last seen trading at $100.76 per barrel, down by 1.15 (0r 1.13%).
In Iran today, thousands of Iranians who have registered with volunteer units joined a pro-government rally in Tehran, with drones and weaponry on parade, as part of the “Sacrifice for Iran” movement.
Iran’s President Masoud Pezeshkian participated in the gathering and addressed the participants where he stated that Iran’s unity would “frustrate the enemy.”
Meanwhile, the United Kingdom Maritime Trade Operations center stated that a tanker was hit by an unknown projectile in the Strait of Hormuz.
On September 16, implementing the first rate hike since 2023 after citing stubborn inflationary pressures due to high energy costs, the U.S. Federal Reserve increased the target range of interest rates by 25 basis points to bring it to the 3.75% to 4.00% range.
Sounding hawkish, U.S. Federal Reserve Chair Kevin Warsh stated that inflation has remained too high for an extended period.
The Fed’s forecasts indicate that policymakers anticipate the higher inflation trend to continue through this year and possibly spill over to next year.
Usually, traders prefer to move away from non-yielding assets like gold as long as interest rates are high. However, the Fed’s move was already priced in by investors before the announcement.
Economists warn that since the Middle East crisis continues to push up energy costs, if it drags, the resultant inflationary pressure could slowdown consumption and demand in the economy.
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