Geopolitical tensions and inflation fears lift USD demand, capping gold gains despite short-term rebound above $4,100.
Gold (XAU/USD) regained footing above $4,100 early Wednesday, halting a two-day slide, as the US Dollar (USD) retreated ahead of June FOMC minutes. The metal remains under pressure from escalating Iran tensions, which bolstered the greenback’s safe-haven appeal and stoked energy-driven inflation concerns.
Prices pulled back from Monday’s two-week high near $4,200 after US strikes on Iran and the revocation of oil export concessions triggered crude rallies. Traders now price an 80% chance of a 25 basis points Fed rate hike by year-end, reinforcing expectations for prolonged tight policy.
The fundamental backdrop suggests caution, with geopolitical risks supporting USD strength and limiting gold’s upside despite short-term technical rebounds.