Gold settles lower on forecasts of higher US interest rates

Gold Bars

Gold and silver prices declined on Wednesday, pressured by expectations that the Federal Reserve may raise interest rates to contain inflationary pressures amid the absence of any clear path toward ending the war in the Middle East.

The decline in precious metals prices came alongside volatile trading in the US dollar index and followed comments from the president of the Federal Reserve Bank of Minneapolis, who stressed the need to focus on containing rising inflation risks, saying it was still too early to predict the timing of future interest-rate moves.

The remarks came as markets continue to expect the Fed to leave interest rates unchanged over the next three monetary policy meetings, with a possible rate hike in December. Investors are also awaiting the release of the Fed’s preferred inflation gauge on Thursday.

On the geopolitical front, Iranian state television reported that Tehran had received a draft memorandum of understanding that would reopen the Strait of Hormuz within 30 days if an agreement is reached. Meanwhile, US President Donald Trump said negotiations with Iran have not yet produced a satisfactory deal.