Gold rose to a two-week high on Wednesday on technical buying as investors assessed the widening Middle East conflict and awaited the U.S. Federal Reserve meeting next week for clues on the interest rate outlook.
Spot gold climbed 1.3% to $4,129.43 per ounce by 0511 GMT, having hit its highest level since July 7 earlier in the day. U.S. gold futures for August delivery jumped 1.4% to $4,134.50.
Escalating tensions in the Middle East have lifted oil prices and inflation concerns, strengthening expectations of interest rate hikes that led gold to its steepest weekly drop since early June last week.
“Buyers have been stepping in seeking a value play after the recent pullback, while hopes for diplomatic progress between the U.S. and Iran are also assisting price moves,” said Tim Waterer, chief market analyst at KCM Trade.
U.S. Secretary of State Marco Rubio said on Wednesday Washington is still willing to negotiate an end to the Iran crisis but Tehran is not serious about talks.
Three oil tankers carrying Saudi crude to Asia reversed course in the Red Sea on Tuesday after threats from Yemen’s Iran-aligned Houthis, raising concerns about energy supply.
The Fed will keep its key interest rate steady for the rest of 2026, according to a Reuters poll, although a majority of those who answered a separate question about the chance of a hike this year now described the likelihood as “high”, a reversal from last month when most saw it as “low”.
Higher-for-longer interest rates increase the opportunity cost of holding non-yielding bullion.
Among other metals, spot silver was up 1.6% at $59.71 per ounce after reaching its highest point since July 10 earlier in the day.
Platinum climbed 1.9% to $1,659.97 and palladium rose 2.2% to $1,310.50.
