XAU/USD falls 0.53% to $4,034 as geopolitical risks boost the USD and energy prices, offsetting softer US inflation data.
Gold prices declined Wednesday, erasing earlier gains as escalating Middle East tensions drove energy prices higher and strengthened the US Dollar. XAU/USD traded at $4,034, down 0.53% on the session, despite softer US inflation data easing Fed rate hike expectations.
The US Producer Price Index (PPI) fell to 5.5% year-over-year, below the 6.2% forecast, while core PPI rose to 4.7%, still under estimates of 5.2%. Following the data, markets reduced Fed tightening bets to 22 basis points by year-end, down from 35 basis points earlier.
Geopolitical risks, including US strikes on Iran and renewed blockades, kept oil prices elevated, reinforcing the Dollar’s strength. The conflict’s impact on energy markets overshadowed bullion’s recovery, stalling a potential test of $4,150.