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US-Iran tensions and Fed hike bets lift the US dollar, cap gold
Gold edges up but lacks follow-through as traders wait for more Middle East developments and keep pricing September rate hikes.
Gold prices showed a modest rise on Tuesday but struggled to extend gains as traders held back on fresh bets ahead of further updates tied to the US-Iran situation, according to FXStreet.
Uncertainty around US-Iran peace talks has supported the safe-haven US dollar, while recovering crude prices have kept inflation concerns and Federal Reserve rate-hike expectations in focus.
FXStreet also pointed to heightened geopolitical risk, including Iran denying US negotiations and reports that Iran's IRGC attacked a US military base in Kuwait with drones, which has tempered hopes for a diplomatic resolution after months of conflict.
On the rate outlook, FXStreet cited CME Group's FedWatch Tool, showing traders assign more than a 60% probability of a September borrowing-cost increase and over an 85% chance of a hike by year end, with the US ISM PMI supporting dollar momentum as manufacturing activity rose to the highest level in more than four years in July.
Latest closeGold $4,432.00 ▲1.6%|WTI crude $82.40 ▲1.4%