XAU/USD falls nearly 2% as Middle East risks rise and US inflation data looms, pressuring bullion prices.
Gold prices slid 1.93% to below $4,250 as geopolitical tensions in the Middle East intensified following US President Donald Trump’s vow to respond to Iran’s downing of a US helicopter. The decline reflects heightened retaliation fears, overshadowing lower Treasury yields and weighing on market sentiment.
Earlier, ADP data showed private-sector hiring slowed to 29K from 35.75K, but traders remain focused on May’s Consumer Price Index (CPI). Expectations for headline CPI to rise to 4.2% YoY and core CPI to 2.9% YoY could reinforce the Federal Reserve’s hawkish stance, further pressuring gold.
The swaps market has priced in 23 basis points of Fed tightening, while the VIX surged 15% on escalation concerns. A potential ceasefire agreement between the US and Iran over nuclear enrichment remains uncertain, adding to volatility.