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Gold prices rise on Middle East tensions, but all eyes are on the Fed meeting

Gold prices rise on Middle East tensions, but all eyes are on the Fed meeting

The gold price rose on Tuesday, as geopolitical tensions in the Middle East escalated. Attention also turned to the U.S. Central Bank's policy announcement on Wednesday. Silver surged to its highest level in 13 years.

As of 10:00 am (14:00 GMT), spot gold rose 0.2%, to $3,390.73, while U.S. futures gold fell 0.2%, to $3,410.40. Jim Wycoff is a senior analyst at Kitco Metals. He said that geopolitical uncertainties, such as the Israeli-Iran conflict, which will likely escalate before de-escalating, would keep the market's safe-haven bids in check.

Israel's Military said Iran's Military Leadership is "on the Run" and that they killed Iran's Wartime Chief of Staff Ali Shadmani over night four days after his appointment, replacing another top commander who was killed in the strike.

U.S. president Donald Trump stated that he wants a "real ending" to the dispute over Iran's nuclear program and suggested he might send senior American officials in order to meet the Islamic Republic, as the Israel-Iran war has raged on for the fifth day.

On Wednesday, the Federal Reserve announces its policy decision, followed by Jerome Powell's Press Conference.

It is expected that the U.S. Central Bank will keep its benchmark overnight rate at 4.25% to 4.50%, as it has done since December.

Gold's appeal is boosted by a low-interest rate environment, as well as geopolitical unrest.

A survey by the World Gold Council revealed that central banks expect to see their gold holdings increase as a percentage of their reserves over the next five year period.

The data showed that retail sales in the United States fell more than expected, but consumer spending was still supported by wage growth.

Spot silver rose 2.1% to $37.1 an ounce, its highest level since Feb 2012.

Wycoff said, "The next target for silver bulls is 40 dollars. I think it's possible in the next few weeks or even sooner."

Palladium rose 1.7%, to $1 047.23, while platinum increased 0.4%, to $1 251.81. (Reporting by Sarah Qureshi in Bengaluru; Editing by Jan Harvey)

(source: Reuters)