Gold rises above $4 000 as traders weigh inflation outlook

Gold rose above $4 000 an ounce, as traders assess whether the Federal Reserve may move to tighten policy and the state of US-Iran talks.

Spot gold rose 0.6% to around $4 030 an ounce, after falling below $4,000 earlier in the session to bullion’s lowest price since November. Traders are awaiting clues on the Fed’s interest-rate outlook from remarks by Chair Kevin Warsh, who is due to speak at the European Central Bank’s annual symposium in Sintra, Portugal. Last month, Warsh used his debut press conference to make clear the central bank won’t tolerate high inflation.

Fed Bank of Cleveland President Beth Hammack said on Tuesday that she is not seeing a lot of evidence interest rates are restraining the economy, and the US central bank may need to raise them to keep inflation down to its 2% goal.

Meanwhile, National Economic Council Director Kevin Hassett said it would be a “macroeconomic mistake” for Warsh to raise interest rates during an appearance on Fox Business. He added that, with former Fed Chair Jay Powell remaining on the central bank’s board, he was “concerned” that a majority of policymakers would vote “because they want to get Trump.“

In the Middle East, US negotiators Jared Kushner and Steve Witkoff had positive discussions with regional leaders in Qatar and technical talks with Iran are moving ahead, according to a senior administration official.

Gold sank 14% in the second quarter, capping the worst performance since 2013. After setting a record in January, the metal has been hurt by speculation that the Fed may hike rates this year to tackle sticky inflation, despite the declines seen in energy costs following the interim US-Iran peace deal. Higher borrowing costs are a headwind for non-yielding metals.

Ahead of US employment data later this week, figures pointed to resilience in the economy. Job openings were little changed in May, suggesting that labor demand remains stable alongside a recent pickup in payroll growth. That gives the Fed more room to hold rates while assessing the path of inflation. Further clues on the state of the economy may come Tuesday, with the release of a slate of jobs data.

On the technical front, gold is also contending with signs of weakness after the precious metal’s 200-day moving average recently dropped below its 50-day counterpart. The pattern — a so-called death cross — is seen by some investors as a sign a long-term downtrend is forming.

The death cross “reinforced the bearish outlook and sustained selling pressure,” said Li Xing Gan, a strategist consultant to Exness. Still, it may not capture short-term rebounds should sentiment improve, Gan said.

Spot gold traded 0.6% higher, to about $4 030 an ounce at 1:35 p.m. in London. The Bloomberg Dollar Spot Index, a gauge of the US currency, rose 0.3%. Silver was little changed at 0.2%. Platinum gained while palladium fell.

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