Persistent geopolitical risks and resilient US data bolster Fed policymakers’ push to maintain higher rates, pressuring gold prices.
Gold prices retreated as rising expectations of a hawkish Federal Reserve overshadowed escalating US-Iran tensions. Iranian missile strikes on US military bases in the Gulf and retaliatory US operations heightened geopolitical risks, keeping oil prices elevated and inflation concerns alive.
Recent US economic data has remained resilient, with inflation running above target. Fed policymakers are increasingly advocating for dropping the easing bias, signaling potential hawkish shifts at the upcoming FOMC meeting. A prolonged closure of the Strait of Hormuz could further delay rate cuts, adding pressure on gold.
Markets now await clarity on the Strait’s status, as its reopening could ease oil prices and revive rate cut bets, potentially supporting gold. However, sustained geopolitical uncertainty may prolong the Fed’s restrictive stance, limiting upside for the precious metal.