XAU/USD falls 1.85% this week amid Middle East risks and expectations of prolonged high US interest rates.
Gold (XAU/USD) retreated to $4,455 on Wednesday, extending its weekly decline to nearly 1.85%. Escalating Middle East tensions, including US strikes on Iranian targets, have dimmed prospects for a near-term US-Iran deal, bolstering the US Dollar (USD).
Traders are pricing in a 40% chance of a 25-basis-point Fed rate hike in December, as higher energy prices stoke inflation concerns. The Strait of Hormuz blockade has kept oil prices elevated, further pressuring gold’s defensive appeal.
Markets remain focused on the Fed’s higher-for-longer rate outlook, reducing demand for non-yielding assets like gold. US President Donald Trump denied reports of stalled talks with Iran, though negotiations remain uncertain.