Gold Struggles Amid Rising Tensions, USD Buoys
Gold prices struggled to gain traction on Tuesday as traders waited for further developments in the Middle East crisis. The US-Iran peace talks have been uncertain, with Iran denying any negotiations were taking place and President Donald Trump citing them as justification for calling off attacks over the weekend.
The uncertainty surrounding the crisis has kept a lid on gold prices, which continue to trade below $4,100. The safe-haven US Dollar (USD) has benefited from the geopolitical tensions, with traders pricing in the risk premium and supporting the Greenback.
Recovering crude oil prices have also kept inflation risks and US Federal Reserve (Fed) rate-hike bets on the table, helping to preserve the overnight recovery of the USD. The CME Group's FedWatch Tool shows over a 60% probability of a September interest rate hike and an 85% chance by the end of this year.
Traders are waiting for the release of US monthly employment details on Friday to gain more cues about the Fed's policy path, which will play a key role in influencing near-term USD price dynamics and gold prices.