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Gold prices held steady in Asian trade on Wednesday as investors remained cautious ahead of the Federal Reserve’s interest rate decision later in the day. Safe-haven demand was supported by escalating tensions in the Israel-Iran conflict and concerns about potential U.S. military involvement.
Spot gold remained unchanged at $3,388.25 per ounce, while August gold futures also held steady at $3,405.95 per ounce by 01:56 ET (05:56 GMT).
Geopolitical Risks and U.S. Military Involvement
The ongoing Israel-Iran conflict intensified on Wednesday, as both sides continued their aerial exchanges. The situation escalated further when the Wall Street Journal reported that President Donald Trump was considering military strikes against Iran, including targeting its nuclear command and demanding Iran’s “unconditional surrender.”
This potential escalation, coupled with a report stating that the U.S. military was deploying additional fighter aircraft to the region, contributed to a risk-off sentiment in global markets. While the Pentagon has called the military buildup defensive, it heightened concerns that the U.S. could be drawn directly into the conflict.
Weak U.S. Economic Data Bolsters Safe-Haven Demand
Amid geopolitical risks, weaker-than-expected U.S. economic data also supported gold’s appeal as a safe-haven asset. May retail sales declined by 0.9%, reinforcing investor expectations that the Federal Reserve may implement a rate cut later this year to support the economy.
The Federal Reserve’s two-day meeting concludes on Wednesday, with markets largely expecting the central bank to keep interest rates unchanged. However, much of the focus will be on updated economic forecasts, particularly for clues on future rate cuts.
Elevated Geopolitical Tensions and U.S. Economic Weakness Support Gold
As markets await the Federal Reserve’s guidance, the combination of rising tensions in the Middle East and soft U.S. economic data is expected to continue supporting gold prices. The risk-off sentiment from the geopolitical developments and concerns over the economic slowdown have kept investor demand for gold relatively high.
Broader Metal Prices Benefit from Weaker Dollar
Broader metal prices also saw an uptick on Wednesday as the U.S. dollar weakened, making metals cheaper for foreign buyers. The U.S. Dollar Index was trading 0.2% lower in Asian trade.
- Silver futures rose 0.6% to $37.365 per ounce.
- Platinum futures added 0.5%, reaching $1,269.90 per ounce.
- Copper futures on the London Metal Exchange gained 0.3% to $9,703.75 per ton, while U.S. copper futures jumped 0.9% to $4.83923 per pound.
Gold prices remain steady, supported by heightened geopolitical risks and weaker U.S. economic data, while broader metal prices benefit from a weaker U.S. dollar. With the Federal Reserve’s interest rate decision looming, market participants are closely watching for any new guidance on future policy moves. Elevated Middle East tensions and expectations of economic slowdown are likely to continue providing a strong floor for gold and other safe-haven assets in the near term.
