Gold rises on Middle East tensions, but Fed's cautious outlook caps gains
KUALA LUMPUR: Gold prices edged higher on Thursday, supported by safe-haven demand amid uncertainty in the Middle East, although gains were capped as traders assessed the US Federal Reserve's signal of a slower pace for future rate cuts.
Spot gold was up 0.30 per cent at US$3,378.86 an ounce, as of 0033 GMT. US gold futures fell 0.40 per cent to US$3,395.80.
Geopolitical tensions remained heightened as US President Donald Trump on Wednesday refrained from confirming whether the US would join Israel's bombardment of Iranian nuclear and missile sites, prompting residents of Tehran to leave the city amid ongoing air strikes.
The US military has moved some aircraft and ships from bases in the Middle East that may be vulnerable to any potential Iranian attack, two US officials told Reuters on Wednesday.
The Fed held interest rates steady on Wednesday. Policymakers still forecast slashing rates by half a percentage point this year, but have slowed the pace of future cuts.
However, Fed Chair Jerome Powell cautioned against putting too much weight on this outlook, warning of "meaningful" inflation ahead as higher import tariffs loom.
Futures on the federal funds rate, which measure the cost of unsecured overnight loans between banks, raised the odds the Fed would resume cutting interest rates at the September meeting, with a roughly 64 per cent probability.
Signalling continued challenges in the labour market, data showed the number of Americans filing new applications for unemployment benefits fell last week, but remained at levels consistent with a further loss of labour market momentum in June and softening economic activity.
The US dollar index traded higher against most major currencies after the Fed kept interest rates unchanged. A higher dollar makes greenback-priced bullion more expensive.
Elsewhere, spot silver was steady at US$36.75 per ounce, platinum rose 1.00 per cent to US$1,335.93, while palladium gained 0.60 per cent to US$1,054.40.
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