Gold, for now, seems to have snapped a two-day losing streak on Wednesday, edging higher after slipping below $4,100. Fresh US strikes on Iran and a cautious dollar lend support, but hawkish Fed bets and rising Treasury yields threaten to cap the rebound.
Gold seems to have snapped a two-day losing streak for now during the Asian session on Wednesday, edging higher after falling to sub-$4,100 levels the previous day. A cautious US dollar ahead of the June FOMC meeting minutes acted as a tailwind for the metal. Yet the pullback from levels just above the $4,200 mark, a two-week high set on Monday, may not have run its course.
Iran strikes revive inflation fears
The US military launched a new wave of strikes against Iran on Tuesday after reports of attacks on three oil tankers in the Strait of Hormuz, jeopardizing an already fragile ceasefire. Traders priced in the geopolitical risk premium, which might continue to benefit the dollar’s reserve currency status and cap the gold price. Washington also moved to withdraw a key concession that allowed Iran to sell oil on international markets, triggering a sharp rally in crude oil prices on Tuesday.
Because of this, energy-driven inflation fears returned, reaffirming the Federal Reserve’s “higher for longer” policy stance.
Hawkish Fed bets weigh on bullion
According to the CME Group’s FedWatch Tool, traders are pricing in over an 80% chance that the US central bank delivers at least one 25 basis points rate hike by the end of this year. Expectations of a more hawkish tone in the minutes pushed Treasury yields higher, with the benchmark 10-year yield rising to 4.567% and the two-year yield climbing to 4.189% on Wednesday. Higher yields favor the dollar and keep a lid on non-yielding gold.
Technical picture stays cautious
The metal remains inside a downward-sloping channel and retains a bearish near-term bias below the 200-day SMA. The MACD has turned positive, hinting at a short-term recovery attempt, but the RSI at 44.33 stays below the midline, reinforcing a cautious tone.
Rallies are likely to meet resistance near the channel’s upper boundary at $4,164.35, with a move beyond the 200-day SMA at $4,491.30 needed to ease the broader bearish pressure. On the downside, the first meaningful support aligns with the channel’s lower boundary around $3,713.85.
Source: FXStreet
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