The yellow metal market moved lower below $3,400 on Tuesday as risk appetite weakened due to the strength in the US dollar. However, the escalating Israel-Iran conflict continued to support gold to hold on to its highest position.
At 9.20 am, gold prices were at $3,383.85, down 0.13% since it opened early Wednesday in Asian trading.
The market mood was a little dull as bullion failed to create a higher trend as the US dollar showed a rebound. The US Dollar Index (DXY) rose 0.46% to around 98.58 points.
Earlier in the week, US President Donald Trump walked out of the G7 meeting in Canada to get involved in the Middle East conflict while signaling that he would support Israel in attacking Tehran.
Senior US officials said Trump was seriously considering attacking Iran and wanted to hold a key meeting with his advisers.
In addition, US market sentiment was weaker with US Retail Sales data and Industrial Production report for May contracting.
For now, market participants are gearing up for the Fed's monetary policy decision. Chairman Jerome Powell and his staff are expected to keep interest rates steady at this week's FOMC meeting.
Attention is also focused on the latest update of economic projections by policymakers, which will provide important clues on the direction of monetary policy in the second half of 2025.
