The price of gold fluctuates ahead of the US interest rate decision as tensions escalate with Iran

The price of gold fluctuated ahead of a careful and balanced decision on the US Federal Reserve’s interest rate, which is scheduled to be issued later on Wednesday while fighting in the Middle East escalated, after a short period of calm.

Gold bullion traded within a narrow range after declining by 1.1% in the previous session, settling near $4,035 per ounce. Interest rate swaps indicate a probability of about one-third that the Federal Reserve will raise interest rates by a quarter of a percentage point, an unusually high level of uncertainty, shortly before the decision is issued, by the standards of recent years, according to Bloomberg News on Wednesday.

High borrowing costs are usually an obstacle to gold, which does not generate a return. Policymakers are likely to find themselves faced with two things: either an inflation reading below where it was in June and the recent rise in oil prices, which accompanied the escalation in fighting between the United States and Iran this month.