Gold traded at $4,167.05 per ounce in Singapore as reduced expectations for a U.S. Federal Reserve rate increase offset persistent geopolitical risks. The precious metal is up 0.6 percent from the prior session but remains down more than 20 percent since the U.S.-Iran conflict began in late February.
The immediate driver: oil supplies from the Middle East have recovered to approximately 80 percent of pre-conflict volumes, according to Shell Chief Executive Wael Sawan. Major banks and shipping analytics firms have provided similar estimates. As oil prices stabilized on the supply recovery, Treasury yields declined after hitting multi-decade peaks the day prior.
That combination reshaped Fed rate expectations. Traders now price in less than a one-in-five chance of a rate increase at the October meeting, down from roughly 40 percent a week ago. The central bank's September meeting minutes, due Wednesday, will clarify the inflation outlook.
Yet the supply recovery remains fragile. Tehran has intensified attacks on tankers in the Strait of Hormuz in recent days. Oil executives warn that global buffers for managing conflict spillover are thinning, suggesting the improved supply data could reverse quickly.
Central bankers meeting in Italy this week noted gold's expanding role in national reserve diversification, reflecting its counter-cyclical demand during geopolitical uncertainty. Silver held steady at $61.34 per ounce. Platinum and palladium showed no material movement. The Bloomberg Dollar Spot Index was flat after declining 0.2 percent in the prior session.
