Gold prices surge above $4,400 as Trump signals Iran conflict may be short-lived
CommodityGeopoliticsDigital Finance
Global gold prices rose for a second consecutive day, touching above $4,430 per ounce, after U.S. President Donald Trump signaled that military operations in the Middle East may not be prolonged, helping to ease concerns that surging energy prices would add to inflationary pressures. Spot gold prices climbed as much as 1.2% to above $4,430 per ounce, following a gain of more than 1% the previous day, and ending a three-day losing streak. Meanwhile, oil prices halted their advance after Trump indicated that the latest strikes on Iran would likely be brief. The U.S. dollar was steady on Thursday after the yen strengthened sharply, prompting market watchers to speculate that Japanese authorities might take additional measures to support the currency. A weaker dollar would enhance gold's appeal for investors holding other currencies. Although gold prices are slightly higher compared to the start of the year, the market has experienced significant volatility, with gold hitting a record high in January before entering a downtrend lasting about four months until June, after which prices recovered. Investors are monitoring the Middle East conflict and assessing whether the U.S. Federal Reserve needs to adopt tighter monetary policy. Another factor supporting gold prices is the continued buying by central banks worldwide, which adds to market demand amid economic and geopolitical uncertainty. John Williams, President of the Federal Reserve Bank of New York, said on Wednesday that there is evidence inflation continues to slow as the effects of tariff measures begin to fade, and higher energy prices have not yet broadly passed through to service prices. His comments helped reduce expectations that the Fed would need to raise interest rates further, and were supported by labor market data showing that U.S. private companies added jobs at a slower pace in August. Christopher Wong, a strategist at Oversea-Chinese Banking Corp. (OCBC), noted that markets from gold to bonds are likely to experience increased volatility in both directions as investors focus on economic data due before the next Fed meeting, particularly the U.S. nonfarm payrolls report scheduled for Friday. Additionally, the sharp swings in oil prices add uncertainty to economic and monetary policy outlooks. Last week, Fed Chair Kevin Warsh delivered a hawkish speech at the Jackson Hole symposium, leading markets to increase expectations that the Fed might raise rates to control inflation. The Federal Open Market Committee (FOMC) is scheduled to meet next in mid-September. However, Wong said that since Warsh has not clearly signaled which meeting might lead to a rate change, upcoming economic data will be more important in shaping short-term policy direction and could cause markets to react sharply to each major data release. As of 11:46 a.m. Singapore time, spot gold was up 1% at $4,427.09 per ounce, while silver rose 1% to $65.94 per ounce. Platinum and palladium also advanced. The Bloomberg Dollar Spot Index, which measures the dollar's movement, was steady after declining 0.2% in the previous session.
