Gold edges lower below $4,450 as Middle East tensions add inflation pressure

Gold prices dipped below $4,450 during early Asian trading hours on Tuesday, as ongoing tensions in the Middle East heightened concerns about rising inflation and potential Federal Reserve interest rate hikes. US President Donald Trump threatened to strike Iran after the two countries exchanged fire in a month for the first time, while Iran's Revolutionary Guard Corps retaliated by targeting US military bases in the region.

The US military conducted an attack on alleged Iranian rocket launchers in the Strait of Hormuz, adding to the uncertainty surrounding oil prices and inflation. Federal Reserve Chair Kevin Warsh emphasized the central bank's commitment to its inflation target, stating that policymakers are not yet confident that price pressures are easing enough to warrant a rate cut.

This hawkish stance surprised many investors, contributing to short-term headwinds for gold. With a 65.4% chance of a rate hike at the Fed's September meeting, compared to 39.9% before Warsh's speech, the market began to reassess the Fed's monetary policy outlook.