Gold struggles to lure buyers amid hawkish Fed counters sliding US bond yields
Gold (XAU/USD) attracts some sellers following a modest Asian session uptick on Tuesday and slides below $4,350 in the last hour, though the downside seems limited. The US Federal Reserve's (Fed) hawkish outlook is seen as a key factor undermining the non-yielding yellow metal.
Gold prices dipped slightly on Tuesday as investors faced a hawkish outlook from the US Federal Reserve. The Fed's updated Summary of Economic Projections indicated that officials anticipate at least one more rate hike this year. This has made the non-yielding gold metal less attractive. Furthermore, President Susan Collins and St. Louis Fed President Alberto Musalem backed further policy tightening, given the elevated inflation risks due to a commodity price shock.
Meanwhile, falling oil prices contributed to cooling inflation concerns and reduced US bond yields, which have dropped from multi-year highs. This has supported the US Dollar, keeping it under its high from late July, boosting gold prices. However, geopolitical tensions, particularly involving Iran and Saudi Arabia, have also played a role.
The IRGC warned of changing the war's geography if the US escalates the conflict, while US economic pressure on Iran threatens to shut down Iranian airlines from September 23. These factors limit downside for crude oil prices and favor the US Dollar, which hampers aggressive bets on gold. Traders are also waiting for the upcoming meeting between US President Donald Trump and Chinese President Xi Jinping on Thursday.
Although fundamental factors warrant caution before jumping into gold, the technical analysis suggests that a break above the 50.0% Fibonacci retracement level of $4,321 could ease the current bearish trend.
Written by urgent.news from FXStreet's reporting — not their text. Machine-written — may contain errors; check the original before relying on it.
