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Gold struggles below $4,100 as USD firms on Iran risks and Fed bets

Gold weakness comes as the US economy slowed in Q2, with BEA data showing 1.5% annual growth and June PCE inflation declining.

Reported · Written up by our desk · Major Pairs

Gold prices are holding a weaker tone into the European session after failing to build on a two day push back above $4,100, according to FXStreet. The move leaves bullion vulnerable as the US Dollar regains momentum and pressures non-yielding gold.

FXStreet links the dollar's recovery to shifting expectations for US interest rates. It notes that Thursday's US data pointed to moderating growth and cooling inflation, tempering bets for an immediate Fed hike, after the dollar fell to its lowest level since June.

In the data cited by FXStreet, the BEA's first estimate showed the US economy expanded at a 1.5% annual rate in the second quarter, down from 2.1% in the prior quarter. The report also references the Personal Consumption Expenditures Price Index falling 0.1% in June, with the year over year rate decelerating to 3.7% from 4.1%, while the core measure rose 0.1% after 0.3% in May and eased to 3.3% from 3.4%.

FXStreet adds that volatile crude oil prices, tied to the US Iran standoff, are keeping inflation risks in view. It also notes the US military completed heavy strikes against Iran in response to Iranian missile attacks, while investors continue to weigh the potential for wider regional conflict that could lift energy prices and reinforce a more hawkish Fed stance.

Latest closeGold $4,098.60 ▼0.0%|WTI crude $86.80 ▲3.8%

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