Gold prices fell in early Wednesday trading, dropping below $4,600 and approaching the multi-week low touched in the previous session. The standoff in the Persian Gulf between the US and Iran, with the two sides yet to establish an understanding that could lead to an end to the blockade, continues to cast doubt over the prospects for the global economy. This backdrop has supported the US dollar, reinforcing its status as both a reserve currency and a safe-haven asset, and weighing on the price of the precious metal. Meanwhile, traders will be closely watching the conclusion of the Federal Reserve’s meeting later today. The central bank is expected to keep interest rates on hold for the third consecutive meeting, but all eyes will be on Jerome Powell’s final post-meeting press conference. Market participants will be looking for further insight into how policymakers at the Fed are assessing the economic impact of the war in Iran, particularly on inflation. If the outgoing Fed Chair adopts a hawkish stance, focusing on inflationary risks, this could lead to further dollar strength and higher Treasury yields, placing additional downward pressure on gold prices.
Ricardo Evangelista, ActivTrades
Source: ActivTrader
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