Rising US-Iran conflict and expectations of tighter monetary policy weigh on gold, erasing recent technical gains.
Gold prices fell sharply, reversing most of a recent rebound as escalating US-Iran tensions and heightened rate hike bets dampened demand. The conflict pushed oil prices higher, tightening financial conditions and increasing pressure on risk assets, including gold.
Prior to the pullback, gold had recovered from a technical rebound but lacked fundamental support. Traders now monitor Middle East developments closely, with de-escalation seen as a potential catalyst for a dovish repricing and a relief rally in gold.
Markets are also pricing in a small but growing risk of a Fed rate hike in July if the geopolitical situation worsens. Such a move could push gold prices to new lows, though the probability remains low for now.