Gold Falls to Lowest Level Since Late March, USD Remains Strong
Gold prices weakened again on Wednesday, reaching their lowest level since March 30, after briefly touching just above $4,500/oz in the Asian session. The strengthening US dollar hindered gold's recovery, as investors worried about the Fed's interest rate hike and geopolitical tensions continued to weigh on the market.
Uncertainty surrounding the US-Iran conflict remained a key factor supporting the dollar. President Trump said new attacks could occur if the deal fails, despite previously delaying strikes at the request of Gulf states. Meanwhile, Vice President JD Vance emphasized that both sides want to avoid military escalation, but significant differences remain over Iran's nuclear program and control of the Strait of Hormuz.
Additional pressure came from persistently high crude oil prices, fueling inflation concerns. This has prompted the market to assess the likelihood of a Fed rate hike. According to the CME FedWatch Tool, there is a greater than 55% chance of the Fed increasing its rate by 25 basis points in 2026. Comments by Philadelphia Fed President Anna Paulson reinforced this expectation, and high US Treasury yields added to the dollar's appeal while pressuring non-yielding gold.
Technically, gold still looks vulnerable to further declines, as a strengthening USD makes any attempted rebound likely to be quickly sold off. Traders are now awaiting the release of the FOMC Minutes for clearer clues on the Fed's policy direction. Furthermore, developments in the Middle East conflict remain an important catalyst for precious metals.
This combination of fundamentals has tilted the market bias toward USD bulls, so gold's upward resistance is likely limited. Investors are likely to be more cautious, with gold's recovery likely to falter and then quickly be suppressed.
Overall, gold faces dual pressures: geopolitics and high interest rate expectations, leading investors to hold positions or sell on temporary rises, awaiting a clear new catalyst.
5 key points:
- Gold plunged to its lowest level since late March, struggling to rise due to the strong USD.
- The US-Iran conflict has created market fear, making the dollar a safe haven.
- High oil prices are making inflation more visible, and the Fed is expected to raise interest rates.
- Traders are awaiting the FOMC Minutes to gauge the direction of Fed policy.
Essentially, every time it tries to rise, gold is easily sold again, with a slim rebound path. (asd)*
Source: Newsmaker.id
