XAU/USD falls below $4,000 after geopolitical risks shift focus to inflation and potential Fed tightening.
Gold prices dropped 1.8% as escalating tensions between the US and Iran raised concerns over oil supply disruptions, pushing energy prices higher. The move revived market expectations of persistent inflation, fueling bets on further Federal Reserve rate hikes.
XAU/USD retreated from near-record levels, trading below $4,000 as investors weighed the impact of higher oil prices on global inflation. The shift in sentiment followed reports of rising geopolitical risks, which historically drive demand for safe-haven assets but also stoke inflation fears.
The decline in gold came as traders reassessed the Fed’s policy outlook, with some pricing in a higher-for-longer interest rate scenario to combat inflationary pressures.