Gold remains under pressure as oil prices rebound after the US intercepted Iranian missiles, reigniting geopolitical tensions in the Middle East and fueling inflation worries. Meanwhile, uncertainty surrounding the Federal Reserve’s upcoming policy decision remains unusually elevated, with some market participants still anticipating additional rate hikes. Traders currently assign a 76.6% probability to a September rate increase, supporting expectations for higher borrowing costs and weighing on bullion demand.
Gold prices (XAU/USD) remain under pressure for a second consecutive session, hovering near $4,020 per ounce during Wednesday’s Asian trading. The precious metal is weighed down by a rebound in oil prices after renewed conflict in the Middle East reignited geopolitical concerns, prompting investors to reassess inflation risks and the outlook for interest rates.
Tensions escalated after Iran launched several ballistic missiles at a US military base in Jordan at around 5:45 p.m. ET, targeting American forces stationed in the region. US military officials reported that all missiles fired by the Islamic Revolutionary Guard Corps (IRGC) were successfully intercepted, according to official statements and released footage. The attack is widely viewed as retaliation for recent US operations against Iranian naval assets.
Attention now turns to the Federal Reserve’s policy announcement, with policymakers broadly expected to keep interest rates unchanged. However, uncertainty remains elevated despite persistent pressure from US President Donald Trump for lower borrowing costs. Markets currently assign a 30.5% probability to an unexpected rate hike at this meeting, an unusually high level of uncertainty ahead of a Fed decision. Looking beyond this week, traders are pricing in a 76.6% chance of a rate increase in September, reinforcing expectations that interest rates may stay higher for longer and limiting the appeal of non-yielding assets such as gold.
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