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Update: Gold Steady As The Iran War Truce Eases Inflation Worries

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(Updates prices.)

Gold was steady midafternoon Tuesday as inflation fears ebbed while oil prices eased after the United States and Iran reached an interim deal to end their war.

Gold for July delivery was last seen down US$0.90 to US$4,350.70 per ounce.

The weekend memorandum of understanding between the United States and Iran sent oil prices to a three-month low, easing concerns the inflation that has followed high prices for the commodity would force central banks to raise interest rates. However the Federal Reserve's policy committee begins its two-day meeting today, with the CME FedWatch Tool seeing a 99.6% probability the group will leave rates unchanged.

"Following last week's capitulation-style sell-off, which took bullion near US$4,000, positioning has become considerably cleaner, leaving traders better placed to respond to shifts in either the technical or fundamental outlook. With market expectations geared towards a rate hike later this year, attention now turns to Wednesday's FOMC, the first under new Chair Kevin Warsh," Saxo Bank wrote in a note to clients.

The dollar eased, with the ICE dollar index last seen down 0.1 points to 99.53. Treasury yields were lower, with the U.S. two-year note last seen paying 4.052%, down 2.9 basis points, while the yield on the 10-year note was down 5.4 points to 4.427%

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