Gold steadies as soft inflation, war risk cloud federal rate outlook

Gold steadied near $4,060 an ounce as traders weighed softer-than-expected June inflation data against escalating Middle East attacks for clues to the Federal Reserve’s interest-rate path.

An underlying gauge of US producer price inflation showed pressures abating before the latest flare-up in the Iran war, but the June numbers didn’t reflect the latest hostilities.

Gold lost 14% in the second quarter, its worst showing since 2013, driven by expectations the Fed could hike rates to manage war-driven inflation.

Fed Chairman Kevin Warsh made it clear that rates are among options to keep inflation within a 2% target but tempered hawkish comments with a willingness to be patient.

The interim peace deal signed last month has all but collapsed, with Washington launching airstrikes for a fifth consecutive day and President Donald Trump pledging to intensify bombardment.