Market News

(Bloomberg) -- Gold steadied, with support stemming from the signing of an interim peace deal between the US and Iran offset by hawkish comments from the new head of the Federal Reserve.

Bullion earlier advanced as much as 1.7% before paring gains, as traders digested both the US-Iran agreement and indications from Fed Chairman Kevin Warsh that he’ll take a tough stance on tackling inflation.

Oil futures fell on Thursday, with the US-Iran pact expected to ease a global energy shock that’s fueled bets for interest-rate hikes. However, uncertainty remains over how quickly fuel prices can come down and when transits through the strait can return to pre-war levels.

“Lower oil still helps at the margin,” said Christopher Wong, a strategist at Oversea-Chinese Banking Corp. “But the Fed outcome complicates the story and argues for a cautious near-term read on gold even as the medium-term constructive case has not disappeared.”

Wednesday’s Fed decision marked the fourth consecutive meeting in which policymakers left rates unchanged, and officials made clear that inflation has become a greater concern than labor-market weakness. Traders are now fully pricing in a tightening of monetary policy by October. Higher interest rates are a headwind for precious metals, which don’t pay interest.