Gold price (XAU/USD) holds positive ground around $4,335 during the early Asian session on Wednesday. The precious metal rebounds from its lowest levels of the year, which reached last week after the United States (US) and Iran had agreed on a framework deal to end the war. All eyes will be on the US Federal Reserve (Fed) interest rate decision later on Wednesday.
Washington and Tehran are preparing to formally sign an interim peace deal that’s left both sides claiming victory, per Bloomberg. A US official said the full accord may be published in the next two days ahead of a signing ceremony in Switzerland.
US President Donald Trump stated on Tuesday that the Strait of Hormuz could reopen on Friday. He added that the agreement is a “done deal” that will prevent Iran from developing nuclear weapons, and the US would not pay war reparations or invest money in Iran.
This development would ease an energy and inflation shock that has roiled global markets and shift expectations surrounding Fed interest rate hikes. Markets cut the chance of a US rate hike in December to 58% from nearly 70% last week, according to the CME FedWatch tool.
The US central bank is expected to keep its benchmark interest rate unchanged at its June policy meeting. This would leave the federal funds target rate steady at 3.50% to 3.75%. Traders will closely monitor the press conference, as Kevin Warsh could provide some hints as to whether he seeks to raise interest rates to tame inflation or cut them as Trump has long demanded.
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