Short covering and Middle East tensions lift gold prices, but rising oil and Fed hike bets cap gains at $4,200.
Gold prices climbed 3.5% from Tuesday’s lows to $4,150 per ounce, driven by short covering and dip buying after technical support held. Middle East tensions and central bank reserve diversification provided additional support, though gains remain limited by resistance near $4,200.
The rally occurred as markets priced in a higher probability of a Federal Reserve rate hike in September, fueled by rising oil prices. Despite the rebound, analysts warn that a stronger dollar and elevated yields could pressure gold lower in the near term.
Resistance at $4,200 is expected to hold, with further upside constrained by expectations of tighter monetary policy. The metal’s recent strength reflects positioning rather than a shift in long-term fundamentals.