XAU/USD falls to a three-month low as geopolitical risks fuel inflation concerns and expectations of tighter monetary policy.
Gold prices dropped below $4,200 during Wednesday’s Asian session, extending losses after breaking the 200-day Simple Moving Average. The decline follows renewed US-Iran hostilities, which have stoked inflation fears and bolstered bets for higher interest rates.
Traders now assign a 75% probability to a Federal Reserve rate hike by year-end, according to the CME Group’s FedWatch Tool. Elevated energy prices, driven by geopolitical tensions, are seen as a key driver of sticky inflation, reducing demand for non-yielding assets like gold.
The US Dollar remains cautious ahead of upcoming US CPI data, while crude oil holds near two-month highs amid sustained risk premiums.