(RTTNews) – Partially offsetting the two consecutive sessions of gains, gold prices have edged lower on Tuesday despite a decline in crude oil prices due to the prospects of reopening of the Strait of Hormuz as economists dismissed any chances of a rate cut by the U.S. Federal Reserve in tomorrow’s announcement. In addition, traders resorted to book profits from the two consecutive sessions of gains of more than around 5%.
Front Month Comex Gold for August month delivery has inched lower by $4.10 (or 0.09%) to $4,347.50 per troy ounce.
Front Month Comex Silver for August month delivery has ticked lower by $0.191 (or 0.27%) to $70.270 per troy ounce.
On Sunday, U.S. President Donald Trump announced via Truth Social that a deal with Iran has been completed, and his message was echoed by Iran as well.
Pakistan, which acted as one of the intermediaries along with Qatar, announced that the signing ceremony will be held in Switzerland on Friday.
The preliminary agreement paves way for the reopening of the Strait of Hormuz in a few days. Markets welcomed this much-awaited announcement as a result of which supply disruption concerns faded.
As the nearly three-plus-month war comes to an end, crude oil prices nosedived yesterday and gold prices soared.
On another crucial issue of the Israel-Lebanon ceasefire, the Iran-backed militia group Hezbollah’s media office today stated that Iran has assured that it will demand a withdrawal of Israeli troops from Lebanon during the next phase of U.S.-Iran talks.
Today, Trump messaged via Truth Social that Iran has agreed to never have a nuclear weapon. On the sidelines of G7 summit in France, Trump cautioned that all hell would rain on Iran if it attempts to acquire a nuclear weapon.
Investors are waiting to comprehend the full text of the Memorandum of Understanding after its release on Friday.
In addition to the Strait of Hormuz issue, investors’ attention is also drawn to the two-day monetary policy meeting of the U.S. Federal Reserve which commenced today.
Gold prices were under pressure since the start of the gulf war. Increasing inflation compelled major central banks, including the U.S. Federal Reserve to refrain from rate cuts. High interest rates acted as a deterrent for overseas buyers of gold.
Recent data showed that in the U.S., the inflation numbers came in around 4%, the highest in three years.
According to CME Group’s FedWatch Tool, investors are betting on a 99.40% chance that the U.S. Federal Reserve will hold the interest rates in the current 3.50% to 3.75% range tomorrow.
The U.S. dollar index was last seen trading at 99.52, down by 0.13 points (or 0.13%) today.
Citing people in the know, the Wall Street Journal reported that a provision in the proposed Memorandum of Understanding to be signed on Friday will also allow Iran to commence selling its oil and fuel right away once the framework agreement is signed.
Reportedly, the clauses also allow Iran to use banking, transportation, and insurance services to facilitate the marketing process. The news pushed oil prices further down.
WTI crude oil for July month delivery was last seen trading at $75.87, down by $4.88 (or 6.04%).
Major central banks have not reduced their interest in buying or holding gold.
In an annual survey conducted by World Gold Council between February 5 and May 19, a majority of central banks (54% of 74) stated that their holdings would remain unchanged while 1% expected a decline. The WGC added that 93% of respondents stated holding gold already, up from 81% of the previous year.
On the economic front in the U.S., Automatic Data Processing’s private jobs data revealed that private employers added an average of 25,500 jobs per week over the four weeks ending May 30.
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