Gold Prices Skid on Thin Ice as Mideast Conflict and Fed Meeting Loom

Gold prices are hovering around $4,275 as traders await the outcome of the US Federal Reserve's two-day monetary policy meeting. The precious metal has been struggling to recover from six-week lows near $4,250 due to escalating tensions in the Middle East and inflation concerns.

The conflict in the Gulf region, particularly between Saudi Arabia and Iran-backed fighters, continues to weigh on gold prices. Oil prices have surged as a result of these tensions, keeping the US Dollar (USD) strong against its major currency rivals.

Experts at Scotiabank note that the recent market dynamics justify the USD's firm tone into the FOMC meeting. They caution, however, that there are still risks around the outlook and predict that an unchanged decision from the Fed would be a shock for markets and negative for the USD.