(RTTNews) – Gold prices are nearly flat on Friday as investors weigh today’s inflation readings, which have reinforced bets on an interest rate hike by the U.S. Federal Reserve, against reports of an upcoming meeting between Iran and the Gulf Cooperation Council to discuss reopening the Strait of Hormuz.
Front Month Comex Gold for October delivery has ticked higher by $2.10 (or 0.05%) to $4,375.80 per troy ounce.
Front Month Comex Silver for October delivery has edged higher by $0.082 (or 0.13%) to $64.495 per troy ounce.
Easing concerns of further attacks in the U.S.-Iran conflict, a report by the Financial Times today indicated that foreign ministers of the Gulf Cooperation Council (GCC) are set to meet their Iranian counterpart in the coming week in an effort to secure a deal with Iran to reopen the Strait of Hormuz for commercial shipping and de-escalate the Middle East crisis.
Of note, Saudi Arabia, United Arab Emirates, Qatar, Kuwait, Oman, and Bahrain are the member countries of the GCC in the Arabian Peninsula. All these countries suffered retaliatory attacks by Iran during the ongoing U.S.-Iran conflict.
In addition, all the economies of these oil-producing nations have been severely affected due to the difficulty in exporting their output after Iran shut the Strait of Hormuz. Many of them have either minimized or paused their production output.
According to the FT report, the initiative for the gathering is undertaken by Oman. The meeting is reportedly slated to be held in the coastal city of Salalah on Monday.
In August, Iran and Oman jointly stated that they were close to striking a deal to reopen the strait along with a revenue-sharing arrangement. However, the U.S. administration issued a stern warning to Oman and other Gulf countries against yielding to Iran’s terms.
The Strait of Hormuz has remained shut since the end of February when the U.S.-Iran conflict began.
The U.S. and Iran have stepped up their attacks on each other’s targets in the recent weeks.
Concerns of investors increased as the gulf crisis appears to expand after Iran-backed Houthi militant group began attacking Saudi Arabian vessels in the Red Sea.
While the Yemeni government forces carried out attacks to contain the Houthis, Reuters reported that the rebel group captured the port city of Mocha, increasing concerns of the potential chances of Houthis closing the Bab al-Mandab Strait. This could consequently increase the influence of Iran in the neighborhood.
Crude oil prices slumped sharply amid expectations of a possible reopening of the strait.
Data released by the U.S. Bureau of Labor Statistics showed that on a month-on-month basis, the Consumer Price Index increased 0.4% in August, accelerating from 0.1% in July, matching market expectations. Driven by the surge in gasoline prices, it is the largest monthly increase in three months.
On a year-on-year basis, the CPI steadied at 3.4% in August, (which was the same in July), in line with forecasts.
The core Consumer Price Index (which excludes food and energy) increased by 0.3% in August, (the most since April), following a 0.2% increase in July. The reading came in above market forecasts of a 0.2% rise.
On a year-on-year basis, the core CPI eased to 2.4% in August from 2.5% of the previous month, aligned with market expectations.
The U.S. dollar index was last seen trading at 99.10, up by 0.02 (or 0.02%) today.
Analysts are of the view that the inflation numbers have substantiated the narrative that U.S. inflation is too high to allow the U.S. Federal Reserve to hold rates at the current level. As a result, the odds of a rate hike jumped.
According to the CME Group’s FedWatch Tool, investors are currently betting on an 86.5% chance of a 25-basis-point interest rate-hike at 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 13.5%.
www.nasdaq.com