XAU/USD gains 1.1% as Middle East tensions and inflation fears fuel demand despite higher US yields and a strong USD.
Gold prices climbed to a two-week high, trading at $4,122, up 1.1% as investors weighed escalating Middle East risks and Federal Reserve policy expectations. Bargain hunting near the $4,000 level supported the rally, though fundamentals remain largely unchanged.
Ongoing US strikes on Iran and retaliatory attacks disrupted energy supplies, pushing WTI crude to $86.50, its highest since June 11. Rising oil prices amplified inflation concerns, reinforcing bets the Fed may maintain higher rates or even hike further to meet its 2% target.
A stronger USD and elevated Treasury yields limited gold’s upside, as non-yielding assets face pressure from higher borrowing costs. Traders now await the July 28-29 FOMC meeting for further policy clues.