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Gold holds below $4,650 as Fed rate risks and Middle East tensions bolster USD
Gold steadied after an earlier pullback from the $4,700 area, while the US dollar rebounded from a three-month low as traders weighed potential Fed hikes into year end.
Gold prices (XAU/USD) were steady below $4,650 heading into the European session, pausing an intraday decline from the $4,700 area, a level last seen on May 14, according to FXStreet.
FXStreet said that, despite softer July US inflation data, traders still assign about a 75.0% chance the US central bank will raise borrowing costs by the end of the year, with concerns linked to volatile crude oil prices. The outlet added that geopolitical uncertainty around the Middle East supported the US dollar after its recovery from a three-month low, with some profit-taking contributing to gold’s modest losses.
FXStreet also pointed to US policy and regional risk signals, noting that Treasury Secretary Scott Bessent announced a campaign to isolate Iran from the global economy and warned that countries doing business with Iran could face US sanctions. It further cited Iran’s stance that it would halt all oil exports through the Strait of Hormuz if an economic war continues, keeping a risk premium in play.
On the rates side, FXStreet said initial declines in US bond yields tied to the Treasury Department’s expanded buyback strategy did not last, with concerns about US national debt crossing $40 trillion. The dollar and gold outlook, the outlet added, hinges on upcoming US data including the Personal Consumption Expenditures (PCE) Price Index on Wednesday and Fed Chair Kevin Warsh’s Jackson Hole keynote on Friday for additional rate guidance.
Latest closeGold $4,432.00 ▲1.6%|WTI crude $82.40 ▲1.4%