Gold prices rose in Asian trading on Wednesday as investors reacted to fresh military tensions between the United States and Iran.
Markets also turned their attention to the minutes of the Federal Reserve’s June meeting, which could offer fresh clues on the future path of interest rates.
Gold Rebounds After Sharp Losses
Bullion recovered after falling sharply in the previous session.
Renewed tensions in the Middle East pushed oil prices higher and revived concerns about inflation driven by energy costs.
Spot gold rose nearly 0.6% to $4,128.81 an ounce by 01:58 ET. Meanwhile, gold futures fell 0.4% to $4,139.41 an ounce.
Iran Tensions Hit Gold Sentiment
Spot gold had dropped 1.6% on Tuesday after renewed U.S.-Iran tensions boosted the dollar.
The stronger dollar, combined with concerns over inflation and interest rates, weighed on gold prices.
Washington launched fresh strikes on Iran and also removed allowances on Iranian oil exports. The move came after Tehran attacked vessels in the Strait of Hormuz.
Oil Prices Raise Inflation Concerns
The latest escalation raised fresh questions about the June framework deal between the U.S. and Iran.
It also created uncertainty over whether both sides can reach a wider agreement. However, Washington indicated that talks with Iran were still continuing.
Oil prices rose sharply after the new strikes. The rebound from yearly lows renewed concerns that higher energy costs could keep inflation elevated in the coming months.
Fed Rate Fears Limit Gold’s Upside
Recent U.S. inflation data has shown steady price pressure since March.
This has kept markets cautious about the possibility of a more hawkish Federal Reserve.
OCBC analysts said that geopolitical risk would usually support gold. However, they noted that the latest market move is being driven more by oil, inflation, and interest rate expectations.
They also warned that gold and silver rallies may struggle to last unless oil prices stabilize or concerns over Fed policy ease.
Silver and Platinum Remain Under Pressure
Other precious metals also weakened on Wednesday.
Spot silver fell 0.3% to $61.145 an ounce.
Spot platinum slipped 0.2% to $1,639.60 an ounce.
Fed Minutes Awaited for Rate Signals
Beyond geopolitical tensions, investors are focused on the Federal Reserve’s June meeting minutes.
The minutes are expected to provide more detail on how policymakers view inflation, interest rates, and the broader economy.
Monetary policy expectations have been a major driver of gold prices since mid-June.
Hawkish Fed Tone Remains a Risk
Gold gained some support recently after soft payrolls data reduced expectations for more rate hikes this year.
However, the Fed struck a hawkish tone at its June meeting. Several policymakers supported the idea of higher interest rates.
That outlook can hurt gold because the metal does not offer a yield.
Gold Market Outlook
The Fed minutes will be closely watched for signs of how policymakers are thinking about inflation and rates.
Markets will also focus on the communication style under new Fed Chair Kevin Warsh.
For now, gold prices remain caught between safe-haven demand from Iran tensions and pressure from inflation, oil prices, and interest rate concerns.
