Gold edges higher as markets weigh Warsh's inflation message after Fed decision

NEW YORK: Gold prices edged higher on Thursday, as markets assessed comments from US Federal Reserve Chairman Kevin Warsh on tackling inflation after the central bank left interest rates unchanged at its latest policy meeting.

Spot gold was up 0.4 per cent at US$4,080.38 per ounce, as of 0103 GMT. US gold futures for August delivery gained 1.1 per cent to US$4,078.

A divided Federal Reserve left interest rates unchanged on Wednesday, while Warsh reaffirmed the US central bank's commitment to bringing inflation under control, leaving markets uncertain about its next policy move.

Markets are now pricing in a 57 per cent chance of a rate hike in September, down from about 81 per cent prior to the policy statement, according to CME Group's FedWatch tool.

Investors are also awaiting June's Personal Consumption Expenditures (PCE) data, due later in the day, for further clues on the Fed's policy path.

The Bank of England and the Bank of Japan are also widely expected to keep rates unchanged this week and caution against inflationary pressures linked to the Middle East war.

A drone hit a US-owned gas storage tanker at Egypt's Mediterranean port of Damietta, British maritime security firm Ambrey said in an initial assessment on Wednesday, and US President Donald Trump vowed to retaliate against Iran for an overnight attack, as the Middle East conflict appeared to expand beyond its main fronts.

Spot silver gained 1 per cent to US$58.20 per ounce, platinum inched 0.3 per cent higher to US$1,616.84, and palladium rose 1.9 per cent to US$1,270.50.