XAU/USD retreats from $4,300 as the USD strengthens on Fed rate hike expectations and geopolitical risks in the Middle East.
Gold prices edged lower on Tuesday, reversing a two-day rally near $4,300 as the US Dollar (USD) rebounded. The Greenback found support from rising crude oil prices, which stoked inflation concerns and reinforced expectations of a potential Federal Reserve rate hike in 2026.
The USD also drew strength from escalating US-Iran tensions, with geopolitical risks keeping safe-haven demand elevated. President Trump’s remarks on Iran’s surrender and threats over the Strait of Hormuz added to market unease, while Houthi attacks on Saudi vessels raised fears of supply disruptions in key trade routes.
The precious metal’s decline reflects its inverse relationship with the USD, as higher interest rate expectations and geopolitical instability reduce its appeal as a non-yielding asset.