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Fidelity International, the asset management firm, intends to increase its gold holdings, confident that the fundamental factors supporting the precious metal in the long term remain intact.

The company reduced its gold investment to a neutral weight during January and February, after seeing at the time that the uptrend had ended.

Gold prices fell from their record highs of $5,600 per ounce at the end of January. But in the long term, Fidelity International sees the uptrend returning again in 2027, noting that any price recovery will depend on the future path of oil prices, interest rates, and the gold market's ability to regain and maintain momentum.

Nico Tzapouras, market analyst at Trado.com (owned by Jefferies), said: "Gold remains subject to the influence of inflation and geopolitical conditions. The continued US strikes on Iran and the disruptions in the Strait of Hormuz support oil prices and keep inflation risks alive."

Yesterday, Wednesday, the United States launched two waves of attacks on Iranian coastal defenses and missile sites after reimposing a naval blockade on the Islamic Republic's ports, and Iran responded by targeting US military sites in neighboring countries.

The latest escalation comes days after the collapse of a fragile temporary ceasefire agreement, fueling concerns about control of the Strait of Hormuz. Crude prices are heading for a weekly gain.

High energy prices stoke inflation fears, which in turn reinforce expectations of interest rate hikes and reduce appetite for gold as a safe haven that yields no return.

Data from the CME Group's FedWatch Tool showed that traders expect a 51% probability that the Federal Reserve (the US central bank) will raise interest rates in September.

The chairman of the board, Kevin Warsh, affirmed his determination to reduce inflation without indicating how to achieve that.

Data released on Tuesday showed that US consumer price inflation slowed in June, causing spot gold prices to jump more than 2% immediately after the report's release. Data released yesterday, Wednesday, also showed a decline in the producer price index.

Tzapouras said: "The weak CPI and PPI readings remove the urgency for the Federal Reserve to pursue a policy of monetary tightening, and could provide a basis for the precious metal to eventually resume its recovery.

However, this decline in inflation may be short-lived given the renewed rise in oil prices. Any de-escalation or resumption of peace talks would be the best scenario for gold."

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