Rising crude prices and Middle East tensions revive inflation fears, bolstering bets on prolonged high US interest rates.
Gold (XAU/USD) fell below $4,500 in Asian trading on Wednesday, extending a late pullback from near $4,550. The decline follows a third consecutive rise in crude oil prices, driven by renewed Middle East hostilities, which stoked inflation concerns and reinforced expectations of prolonged high US interest rates.
The non-yielding metal remains under pressure as geopolitical risks support the US Dollar (USD), keeping gold near the lower end of its weekly range. Recent US military strikes on Iran’s Qeshm Island and retaliatory missile attacks on US facilities in Kuwait and Bahrain have heightened tensions, with no breakthrough in US-Iran negotiations over Tehran’s nuclear program.
Market focus remains on the Federal Reserve’s policy outlook, as higher-for-longer rates reduce demand for gold. The commodity’s weakness contrasts with safe-haven demand for the USD, further capping gains.