US Dollar Strength Squeezes Gold Amid Ongoing Iran Tensions

The US dollar has been rising against major currencies due to ongoing geopolitical tensions and a strong bid tone surrounding the safe-haven Greenback. This is limiting the appeal of gold, which struggles to attract buyers amid the bullish USD.

The Institute for Supply Management reported that economic activity in the US manufacturing sector expanded for the ninth straight month in September, while raw material prices increased for a 24th consecutive month. This has added to inflationary concerns and underpins prospects for additional Fed tightening, helping limit the overnight pullback in US bond yields from multi-year highs.

The USD remains firm near its highest level since April 2025 due to ongoing tensions with Iran, which are keeping a geopolitical risk premium firmly in play. This is supportive of the strong bid tone surrounding the safe-haven Greenback and acts as a headwind for gold.