Gold prices fluctuated on Tuesday (October 20) as investors continued to monitor the Federal Reserve’s interest rate policy direction, alongside developments in negotiations aimed at ending the U.S.-Iran conflict. Gold initially rose by 0.4% before reversing to fall by 0.7%, reflecting a market still searching for new catalysts amidst geopolitical uncertainty.
Negotiations between the U.S. and Iran remain ongoing; however, reports suggesting that an agreement was near have been denied by diplomats involved in the talks. Earlier, news of a potential breakthrough had pressured oil prices, the U.S. dollar, and bond yields. Following the denial of these reports, energy prices rebounded and remained elevated.
Persistent high energy prices are a point of concern, as they could sustain inflationary pressure. Such conditions might prompt the Federal Reserve to maintain a tight monetary policy or even raise interest rates—a scenario that poses a challenge for gold, an asset that yields no return.
Throughout October, gold has traded within a limited range. The market currently estimates only a 15% probability of a 25-basis-point interest rate hike at the Fed’s October 27–28 meeting, following comments last week by Fed official Kevin Warsh, which reinforced expectations that the central bank would likely adopt a "wait-and-see" approach.
Nevertheless, with U.S. inflation still exceeding the 2% target, investors remain focused on whether the Fed is merely delaying a rate hike in October, only to resume policy tightening later in the year. Spot gold was last trading at US$4,123.97 per troy ounce, while silver rose 1.2% to US$57.77.
Newsmaker Analysis: Gold remains in a "wait-and-see" phase, with its price trajectory heavily dependent on two key factors: Federal Reserve policy and developments in the U.S.-Iran conflict. Should inflationary pressures and energy prices remain high, the potential for gains in gold may be limited. However, a resurgence in geopolitical tensions or a decline in expectations for interest rate hikes could serve as a catalyst for gold to strengthen once again.