The yellow metal market has been flat in daily trading since last week, almost heading for new highs even as the heat of war in the Middle East has intensified.
At 9.15 am, gold prices were at $3,350, down 0.53% since it opened early Tuesday in Asian trading.
The bearish signal for gold is that the Fed's latest hawkish tone has supported the value of the US dollar and contributed to safe-haven assets calming down.
Meanwhile, the risk of rising political tensions in the Middle East between Israel and Iran has investors on edge amid ongoing trade-related volatility.
The market is now looking for a suitable price drop before positioning for a move that could potentially open up new highs again.
In a significant escalation in the ongoing war between Iran and Israel, the US launched airstrikes targeting three Iranian nuclear sites at Fordo, Natanz, and Isfahan early Sunday.
Iranian Foreign Minister Abbas Araghchi vowed that Iran would defend itself by all means necessary not only against US military aggression but also against the reckless and illegal actions of the Israeli regime.
US President Donald Trump warned that any retaliation would be met with greater force and added that there would be damage or tragedy for Iran.
This raises the risk of spillover and wider conflict in the Middle East, which should support gold prices higher.
The Fed is forecasting two rate cuts this year. However, Fed officials are forecasting only one rate cut of 25 basis points each in 2026 and 2027 amid concerns that the Trump administration’s tariffs could raise US inflation.
