Gold prices edged higher on Thursday as investors assessed comments from Federal Reserve Chair Kevin Warsh about inflation and future monetary policy. The central bank kept interest rates unchanged at its latest meeting.
Spot gold rose 0.3% to $4,076 per ounce after gaining 2% on Wednesday. US gold futures for August delivery increased 1% to $4,073.
The Federal Reserve left rates unchanged on Wednesday, while Warsh repeated the bank’s commitment to controlling inflation. However, his remarks gave markets little clarity about the central bank’s next move.
Edward Meir, a financial markets analyst at Marex, said investors appeared surprised and somewhat disappointed by Warsh’s tone. He added that the chair did not seem eager to raise interest rates.
Meir said the Fed’s cautious approach supported gold prices. Lower expectations for further rate increases usually weaken the dollar and reduce the opportunity cost of holding gold.
Although investors often view gold as protection against inflation, high interest rates can reduce its appeal because the metal offers no regular income.
Markets are now waiting for the release of US personal consumption expenditure data for June. The PCE index remains one of the Federal Reserve’s preferred measures of inflation.
Geopolitical developments also influenced trading. The US military announced new strikes on Iran on Thursday, intensifying a conflict that has continued for five months.
Oil prices gave up part of their recent gains as tankers continued moving through Middle Eastern shipping routes.
Analysts at TD Securities warned that gold may struggle to maintain its current rise. They forecast a possible decline toward $3,900 per ounce, especially if oil prices climb further during the summer and renew inflation concerns.
For now, gold remains supported by uncertainty over interest rates, inflation and regional tensions. Investors will also monitor the dollar and bond yields for further market direction.
