Gold Slides as Fed Rate Uncertainty and US‑Iran Talks Cloud Markets

Gold slipped 0.4% to $4,123.97 per ounce in London as traders weighed the Federal Reserve’s possible rate hike and the progress of US‑Iran peace talks. Bullion swung between a 0.4% rise and a 0.7% fall during the session, reflecting mixed sentiment. A diplomat involved in the negotiations said reports that a deal to end the US‑Iran war was near are inaccurate, keeping the geopolitical risk factor alive. Energy prices stayed high, limiting inflation relief and keeping the Fed on the radar for another rate increase later in the year. The dollar index slipped 0.2% and bond yields eased, while oil prices trimmed earlier losses after an unverified claim of a breakthrough. Investors are watching the Fed’s next move after the September rate hike – the first since 2023. Markets now assign a 15% probability to a quarter‑point hike at the Oct. 27‑28 meeting. Comments from former Fed governor Kevin Warsh last week warned against “prejudging” meetings, but most officials still expect at least one more rise this year. Inflation remains above the Fed’s 2% target, adding pressure to pause now and tighten again later. Spot silver rose 1.2% to $57.77, platinum advanced and palladium fell, showing divergent metal reactions.

Context

Gold’s sensitivity to interest‑rate expectations and geopolitical news makes it a barometer for risk appetite. A firmer Fed or renewed tension in the Middle East can push the metal lower, while easing inflation or a diplomatic breakthrough could boost demand.