Gold edged higher as traders anticipated potential interest rate signals from the Federal Reserve's annual meeting in Jackson Hole, as well as high-stakes diplomacy in Washington regarding efforts to end the war in Ukraine.

Gold bullion prices traded near $3,350 an ounce, holding within a narrow range for the past few sessions. Central bankers from around the world will gather for a meeting in Wyoming starting Friday, with market pricing indicating a US interest rate cut is likely at the Fed's policy meeting next month.

Fed chief Raphael Bostic said after a three-day visit to the southeastern US that the burden of tariffs is real, high borrowing costs are squeezing business profits, and he is open to adjusting interest rates soon. Lower interest rates typically benefit gold because the precious metal does not pay interest. "Markets are increasingly expecting the Federal Reserve to take a more dovish tone at the upcoming Jackson Hole symposium, with traders largely ignoring last week's slightly stronger US inflation data," said Priyanka Sachdeva, an analyst at Phillip Nova in Singapore. "The broader market view is that inflationary pressures are still cooling."

Meanwhile, Ukrainian leader Volodymyr Zelenskiy and his European allies will announce US President Donald Trump's commitments at his summit with Russia's Vladimir Putin last week, amid concerns that he will try to force Kyiv into making unpalatable concessions. Any signs of a ceasefire could reduce demand for the precious metal as a safe-haven asset.

Gold has gained more than a quarter this year, hitting a record high in April. Since then, prices have moved sideways, with investors tracking the impact of the US-led trade war, concerns about the strength of the global economy, and geopolitical tensions. Central bank buying has also helped support bullion prices.

Gold rose 0.3% to $3,347.51 an ounce at 12:42 p.m. in London. The Bloomberg Dollar Spot Index was steady. Silver rose, platinum was little changed, and palladium fell. (alg)

Source: Bloomberg