Gold prices (XAU/USD) remained firm above $4,300, trading around $4,335 during the early Asian session on Wednesday, as optimism grew over a potential US-Iran peace deal and ahead of the US Federal Reserve's interest rate decision later in the day [1]. The precious metal rebounded from its lowest levels of the year, which were reached last week following the announcement that the United States and Iran had agreed on a framework deal to end the war [1].
According to Bloomberg, Washington and Tehran are preparing to formally sign an interim peace deal, with both sides claiming victory. A US official indicated that the full accord could be published within the next two days, with a signing ceremony expected in Switzerland [1]. US President Donald Trump stated on Tuesday that the Strait of Hormuz could reopen on Friday, describing the agreement as a 'done deal' that would prevent Iran from developing nuclear weapons. Trump also emphasized that the US would not pay war reparations or invest money in Iran [1].
This development is expected to ease the energy and inflation shock that has impacted global markets and is shifting expectations regarding future Federal Reserve interest rate hikes. Market participants have reduced the probability of a US rate hike in December to 58%, down from nearly 70% last week, according to the CME FedWatch tool [1]. The US central bank is anticipated to keep its benchmark interest rate unchanged at its June policy meeting, maintaining the federal funds target rate at 3.50% to 3.75% [1]. Traders are closely watching the Fed press conference for any signals from Kevin Warsh on whether rates may be raised to combat inflation or cut, as President Trump has advocated [1].
CONCLUSION
Gold prices are holding steady above $4,300 as markets await the formal signing of a US-Iran peace deal and the Federal Reserve's rate decision. The prospect of eased geopolitical tensions and a steady Fed policy has reduced expectations for further rate hikes, supporting gold's safe-haven appeal. Market participants remain attentive to upcoming official announcements and central bank guidance.