Gold Dips Below $4,000 as Fed Cut Bets Fade

Gold traded below $4,500 an ounce on Wednesday after tumbling nearly 2% in the previous session, as escalating tensions between the US and Iran kept investors focused on inflation risks and the prospect of higher interest rates. President Donald Trump warned that the US could resume strikes on Iran within “two or three days” if Tehran failed to agree to Washington’s peace terms. The remarks came shortly after Trump said he had called off a planned attack following appeals from Gulf allies, with Tehran’s nuclear program being a major sticking point in negotiations. The prolonged conflict has effectively kept the crucial Strait of Hormuz closed to shipping, driving oil prices higher and intensifying inflationary pressures. Accelerating US inflation has also prompted traders to further reduce expectations for Federal Reserve rate cuts this year, while reinforcing speculation that the central bank could still raise rates before the end of the year.

Gold slipped below toward $4,500 an ounce on Tuesday, giving back part of the previous session’s gains as uncertainty surrounding the Middle East conflict and persistent inflation concerns weighed on sentiment. Markets responded cautiously to President Donald Trump’s remarks hinting at possible progress toward a peace agreement with Iran, with investors remaining doubtful that a resolution to the crisis was close. Gold has been under pressure since the conflict erupted, as soaring oil prices fueled inflation fears and reinforced expectations for additional central bank interest rate hikes. Stronger US inflation has also led traders to further scale back expectations for Federal Reserve rate cuts this year, while increasing speculation that the Fed could still raise rates before year-end. Investors are now awaiting the latest FOMC minutes and flash US PMI data for further clues on the outlook for monetary policy and economic activity.

Gold traded around $4,550 an ounce on Tuesday, holding gains from the previous session as hopes grew that the US and Iran may return to negotiations, helping ease some inflation concerns. President Donald Trump said he suspended a planned strike on Iran scheduled for Tuesday after appeals from Saudi Arabia, Qatar, and the UAE, saying the Gulf nations believed a deal with Tehran that satisfies Washington was still achievable. Gold had faced pressure since the outbreak of the Middle East conflict, as surging oil prices intensified inflation fears and strengthened expectations for further central bank interest rate hikes. Rising US inflation has also prompted traders to scale back expectations for Federal Reserve rate cuts this year, while increasing speculation that the Fed could even raise rates before year-end. Investors are now awaiting the latest FOMC minutes and flash US PMI readings for further signals on the outlook for monetary policy and economic conditions.