Gold prices moved higher during Asian trading on Wednesday, extending their winning streak to a fifth consecutive session.
Optimism surrounding an interim US-Iran peace agreement eased concerns about energy-driven inflation. Meanwhile, investors awaited the Federal Reserve’s latest interest rate decision.
Spot gold gained 0.3% to $4,342.56 per ounce. US gold futures also rose 0.3% to $4,368.40.
Gold Recovers From Multi-Month Lows
The precious metal has now advanced for five straight sessions after recovering from recent multi-month lows near $4,000 per ounce.
Improved geopolitical sentiment and a weaker US dollar have supported the rebound.
However, gold’s next major move may depend on the Federal Reserve’s policy guidance and its outlook for US interest rates.
US-Iran Peace Agreement Supports Market Sentiment
Investor confidence improved following reports of an interim agreement between the United States and Iran.
The proposed accord is intended to end hostilities in the Middle East and extend the existing ceasefire while negotiations continue.
It also includes measures allowing Iran to restart oil exports. The potential return of Iranian supply has pushed crude oil prices sharply lower.
Lower Oil Prices Ease Inflation Concerns
Falling energy prices have reduced fears that another oil shock could increase inflation across the global economy.
As inflation concerns eased, investors lowered their expectations for tighter US monetary policy.
This development has been positive for gold. The metal does not pay interest and generally becomes more attractive when borrowing costs and bond yields are expected to decline.
Weaker US Dollar Lifts Gold Prices
Gold has also benefited from recent weakness in the US dollar.
The US Dollar Index remained close to its lowest level in around 10 days. A weaker dollar makes gold less expensive for buyers using other currencies.
However, this support could weaken if the Federal Reserve adopts a more aggressive position on inflation and interest rates.
Federal Reserve Decision Takes Centre Stage
Market attention is now focused on the Federal Reserve’s first policy announcement under Chair Kevin Warsh.
The central bank is widely expected to leave interest rates unchanged. Therefore, investors will concentrate on the Fed’s updated economic forecasts and policy projections.
The closely watched “dot plot” could provide fresh clues about how officials expect interest rates to develop over the coming months.
Investors Watch for Signs of Future Rate Cuts
Markets will examine whether policymakers still believe there is room to reduce interest rates later in 2026.
Any indication that rate cuts remain possible could place further pressure on the dollar and Treasury yields. Such an outcome would likely support gold prices.
In contrast, a hawkish message from the Fed could strengthen the dollar and push bond yields higher. This could limit gold’s recent rally.
Central Banks Maintain Strong Gold Demand
Long-term demand for gold also remains resilient.
A recent World Gold Council survey found that 45% of central bank reserve managers expect to increase their gold holdings over the next 12 months.
The results highlight gold’s continued importance as a portfolio diversifier and a hedge against geopolitical and economic uncertainty.
Silver and Platinum Prices Advance
Other precious metals also recorded gains during Asian trading.
Silver rose 0.6% to $70.47 per ounce, while platinum increased 0.4% to $1,815.72 per ounce.
Further movements across the precious metals market are likely to depend on the Federal Reserve’s policy statement, updated projections and Kevin Warsh’s comments.
