Gold Eyes Fed

Gold Prices Edge Higher as Weaker US Dollar Offsets Middle East Uncertainty Ahead of Fed Decision

Gold prices climbed on Monday, supported by a weaker US dollar as investors weighed the temporary easing of tensions in the Middle East while awaiting the US Federal Reserve's monetary policy decision later this week.

Spot gold gained 1.1% to $4,096.36 per ounce as of 09:52 WIB (0252 GMT), while August US Gold Futures rose 0.68% to $4,098.60 per ounce.

The precious metal ended last week nearly 1% higher, despite heightened market volatility driven by geopolitical developments and shifting expectations surrounding US monetary policy.

Weaker US Dollar Boosts Gold Demand

Gold received additional support after the US Dollar Index (DXY) fell 0.3%, making dollar-denominated bullion more attractive for investors holding other currencies.

The rally also followed a sharp decline in crude oil prices after military hostilities between the United States and Iran eased over the weekend.

Following 13 consecutive nights of US strikes on Iranian targets, President Donald Trump halted the bombing campaign late Friday to allow diplomatic efforts to continue. Iran also refrained from launching retaliatory attacks against neighboring countries hosting US military bases during the weekend.

Crude oil prices dropped more than 5% in early Monday trading, reversing part of last week's gains that had been fueled by concerns over potential supply disruptions through the Strait of Hormuz and the Red Sea.

Although lower oil prices could help ease inflationary pressures, investors remain cautious as they assess the broader economic outlook ahead of the Federal Reserve meeting.

Federal Reserve Decision in Focus

Market attention is now firmly centered on the Federal Reserve's policy announcement scheduled for Wednesday.

The US central bank is widely expected to leave interest rates unchanged. However, traders will closely monitor comments from Federal Reserve Chair Kevin Warsh for clues on the timing of potential rate cuts and policymakers' assessment of inflation risks and economic growth.

In addition to the Fed meeting, investors will also keep a close eye on upcoming US economic releases, including inflation and labor market data, which could provide further guidance on the central bank's policy path in the coming months.

Precious Metals and Copper Market Update

Among other precious metals, spot silver advanced 2.1% to $59.39 per ounce, while platinum surged 2.3% to $1,630.83 per ounce.

Meanwhile, London Metal Exchange (LME) copper futures edged up 0.4% to $13,693.58 per metric ton, while US copper futures were little changed at $6.36 per pound.

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Gold Weekly Rebound

Gold Set for First Weekly Gain in Three Weeks

Gold prices edged lower on Friday but remained on track to post their first weekly gain in three weeks, as escalating geopolitical tensions in the Middle East continued to support safe-haven demand despite growing expectations that the Federal Reserve will keep interest rates higher for longer.

As of 08:35 WIB, XAU/USD slipped 0.2% to $4,042.72 per ounce, while Gold Futures were little changed at $4,044.92. Silver (XAG/USD) declined 0.3% to $57.47 per ounce, while Platinum (XPT/USD) fell 0.5% to $1,589.67 per ounce.

Middle East Tensions Fuel Inflation Concerns Ahead of Fed Meeting

Gold was little changed after falling nearly 2% in the previous session but has still gained around 0.8% this week, putting the precious metal on track for its first weekly advance in three weeks.

Geopolitical risks intensified after Iran-backed Houthi militants in Yemen attacked two Saudi oil tankers in the Red Sea. In response, U.S. President Donald Trump warned that Washington would hold Iran accountable for any future Houthi attacks on commercial shipping and threatened further military action against Tehran.

Market sentiment remained cautious after The New York Times reported that Iran rejected a U.S.-backed ceasefire proposal, dampening hopes for a near-term de-escalation despite ongoing diplomatic efforts.

The renewed geopolitical uncertainty also pushed crude oil prices higher, adding to inflation concerns. Meanwhile, stronger-than-expected U.S. labor market data reinforced expectations that the Federal Reserve may maintain a restrictive monetary policy. Initial jobless claims unexpectedly fell to 187,000, their lowest level in decades, driving the yield on the benchmark 10-year U.S. Treasury note to its highest level since January 2025.

Markets are now pricing in roughly a 34% probability of a 25-basis-point interest rate hike at next week's Federal Reserve meeting, as resilient employment data and rising energy prices continue to strengthen the inflation outlook.

Analysts at Nomura expect the Fed to leave interest rates unchanged. They also believe Fed Chair Kevin Warsh is unlikely to provide meaningful forward guidance, as the July meeting will not include updated economic projections or a revised dot plot.

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Gold Eyes Fed

Gold Trades Near Two-Week High Ahead of Fed Meeting as Middle East Risks Offset Inflation Concerns

Gold prices hovered near a two-week high on Thursday after reaching their strongest level in the previous session, as investors balanced escalating geopolitical tensions in the Middle East against concerns that rising oil prices could fuel inflation and keep the Federal Reserve on a restrictive monetary policy path.

As of 1:31 PM WIB, spot gold (XAU/USD) slipped 0.1% to $4,127.99 per ounce, while Gold Futures declined 0.5% to $4,130.62. Meanwhile, silver (XAG/USD) gained 0.3% to $59.88 per ounce, and platinum (XPT/USD) advanced 0.8% to $1,658.28 per ounce. Gold continued to consolidate recent gains following a nearly 3% rally over the previous two trading sessions.

Middle East Conflict Keeps Inflation Risks in Focus

Geopolitical tensions remain a key driver of market sentiment as the United States and Iran show no signs of returning to negotiations. Meanwhile, attacks on oil tankers transiting the Red Sea were reported for the first time since the conflict began in late February.

The Iran-backed Houthi movement in Yemen claimed responsibility for the attacks, raising fresh concerns over one of the world's most critical shipping routes for Saudi Arabian crude oil exports. The renewed disruption has helped keep crude oil prices near multi-week highs, prompting investors to reassess inflation expectations ahead of next week's Federal Reserve policy meeting.

Persistently high energy prices could complicate the inflation outlook and strengthen the case for maintaining elevated interest rates. Higher borrowing costs generally reduce the appeal of non-yielding assets such as gold by increasing the opportunity cost of holding the precious metal.

Fed Rate Outlook Remains Uncertain

Market participants remain divided over whether the Federal Reserve will deliver another interest rate hike at next week's meeting. The lack of clear policy guidance from Fed Chair Kevin Warsh has added to uncertainty, leaving traders closely focused on incoming economic data and central bank signals.

Any indication that inflation remains persistent could reinforce expectations for tighter monetary policy, while a more cautious tone from policymakers may provide additional support for gold prices.

Dip Buying Supports Gold Despite Higher Interest Rate Expectations

According to analysts at ANZ, investors continue rebuilding their gold positions despite expectations that interest rates may remain higher for longer. Recent price weakness has attracted bargain hunters rather than triggering widespread selling.

The bank noted that non-commercial net long positions have climbed to their highest level since January. In addition, renewed inflows into gold-backed exchange-traded funds (ETFs) suggest that investors are increasingly using gold as a hedge against elevated equity market valuations and ongoing geopolitical uncertainty.

ANZ also highlighted that gold has demonstrated remarkable resilience even as rising energy prices point to a more restrictive monetary policy environment. Strong dip-buying demand has helped offset the downward pressure that higher inflation expectations and rising interest rates would typically place on precious metals.

Gold Holds Above Key $4,000 Support

Gold has remained firmly above the important psychological support level of $4,000 per ounce this week after suffering a sharp correction from its January record high. Traders are now watching whether bullish momentum can continue building toward the next major resistance level near $4,200 per ounce.

With geopolitical risks, inflation concerns, and the upcoming Federal Reserve meeting dominating market sentiment, gold is likely to remain highly sensitive to both economic data releases and developments in the Middle East. A breakout above the $4,200 resistance could reinforce bullish momentum, while a hawkish Fed stance may trigger renewed profit-taking in the precious metal.

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