Trump's Latest Comments Ease Inflation Fears as Gold Price Rises for Second Consecutive Day, Reclaiming $4,400 Level

International gold prices rose for two consecutive days, propelled by easing geopolitical tensions and declining Federal Reserve (Fed) rate hike expectations. Spot gold prices rebounded over 1% during the session, briefly breaking above the $4,430 per ounce level.

On the geopolitical front, reports indicate that former U.S. President Trump is privately discussing with his advisors the possibility of announcing an end to the six-month conflict with Iran. He has publicly stated that the latest military escalation will be brief and short-lived. This development has effectively eased market concerns over energy price spikes triggering runaway inflation, thereby slowing the upward momentum of crude oil prices.

However, the frontline situation remains complex. Defense Secretary Pete Hegseth is extending U.S. military deployments in the Middle East through 2027 to maintain policy flexibility. On Tuesday, U.S. forces escorted 40 commercial vessels carrying 18 million barrels of oil through the Strait of Hormuz, intercepting cruise missile and drone attacks en route. Subsequently, Iran launched missile and drone strikes on a U.S. military base in Kuwait.

On the monetary policy front, New York Fed President John Williams noted that inflation is continuing to ease as tariff effects diminish, and high oil prices have not spread to other service sectors. Additionally, the slowdown in U.S. private-sector job growth in August significantly weakened market expectations for a September rate hike.

This dovish stance contrasts with the hawkish inflation warnings previously issued by Fed Chair Kevin Warsh at the Jackson Hole symposium, prompting markets to closely watch upcoming key data releases. Ultimately, supported by a weaker U.S. dollar and declining U.S. Treasury yields, gold’s appeal as a safe-haven and investment asset has rebounded.