Gold prices were steady in Asian trading on Wednesday, as markets digested the latest military developments between the United States and Iran, while attention also turned to the minutes of the Federal Reserve's June meeting.
The yellow metal stabilized after a sharp decline in the previous session, as renewed tensions in the Middle East pushed oil prices higher and revived concerns about energy-related inflation.
Spot gold rose 0.3% to $4,117.82 an ounce by 5:32 a.m., while gold futures fell 0.7% to $4,127.59 an ounce.
Spot prices had fallen 1.6% on Tuesday, after escalating tensions between the United States and Iran boosted the dollar and raised growing concerns about inflation and interest rates.
Washington launched new attacks on Iran and also canceled permits related to Iranian oil exports, in response to Iranian attacks on ships in the Strait of Hormuz.
This development raised questions about the framework agreed upon in June between the United States and Iran, and the possibility of reaching a more comprehensive agreement. However, Washington indicated that negotiations with Iran were still ongoing.
Aside from the geopolitical aspect, the focus on Wednesday is on the minutes of the Federal Reserve's June meeting, which are expected to provide further clues about the central bank's plans regarding interest rates.
Speculation about monetary policy has been a major driver for gold since mid-June, with the precious metal making some gains following weak payroll data that dampened expectations of an interest rate hike this year.
However, the Fed had taken a hawkish tone during its June meeting, with several monetary policymakers supporting the idea of raising interest rates, a scenario that is negative for non-yielding assets such as gold.
The Fed minutes will be closely watched for further clues about the central bank's direction, while the communication style under new chairman Kevin Warsh will also be of interest.
