Gold held firm in Asian trading on Wednesday after US President Donald Trump appeared to rule out a long military campaign in the Middle East, damping fears that escalating conflict would stoke a persistent rise in energy-driven inflation. Spot bullion was trading around $4,386.94 an ounce, little changed on the session, following a 1% rebound the previous day that ended a three-day losing streak.
The rally in crude oil also lost momentum after Trump characterised the latest strikes on Iran as likely short-lived. Earlier fighting had reignited fears of an open-ended war that could push energy costs higher and feed broader inflation — a headwind for non-yielding assets such as gold. Easing those concerns helped the metal find a floor.
Dollar dip and yen watch
The US dollar edged lower on Wednesday after a sharp rise in the yen kept traders alert for any intervention by Japanese authorities to support their currency. A weaker greenback tends to make dollar-priced gold cheaper for overseas buyers, lending the metal additional support.
The Bloomberg Dollar Spot Index was flat after falling 0.2% in the prior session, reflecting some loss of momentum in the currency that had rallied on hawkish Fed expectations.
Fed speak and jobs data temper rate rise fears
Federal Reserve Bank of New York President John Williams said there is evidence that inflation continues to ease as the impact of tariffs fades, adding that higher energy prices are not spilling over into other services. His remarks tempered expectations that the US central bank might need to raise interest rates at its next meeting in two weeks.
That view was reinforced by data showing US companies added jobs at a more moderate pace in August, suggesting the labour market is cooling without triggering alarm.
Williams’ tone struck a different note from Fed Chairman Kevin Warsh, whose hawkish speech on Friday had raised the prospect of a rate hike to contain inflation. The mixed signals have left traders reassessing the likelihood of tighter policy, a key factor for gold because higher rates increase the opportunity cost of holding non-interest-bearing bullion.
Key takeaways
- Gold steadied near $4,387/oz after Trump indicated no prolonged Middle East war, reducing inflation worries linked to energy.
- The dollar softened against the yen, making gold more affordable for non-US buyers.
- Fed’s Williams said inflation is still easing and energy rises aren’t spreading to other services, cooling rate-hike bets.
- Mixed jobs data added to uncertainty over the Fed’s next move, supporting the metal.
Silver inched up 0.1% to $65.38 an ounce, while platinum and palladium were little changed across the session. Traders will now watch for any further official statements from the Fed and the administration that could shift the outlook on rates or geopolitical risk.
For the latest on the metal’s direction, track the live gold price and monitor currency moves as the dollar-yen dynamic continues to influence bullion demand in Asian trade.