Dollar Strength Undermines Gold Prices Amid Fed Hawkishness

Gold prices have struggled to maintain their gains from the previous day, despite a rebound to above $4,300 levels. The metal is facing fresh supply in the Asian session on Wednesday, as the US Dollar (USD) preserves its recent strong gains to the highest level since July 30.

The Federal Reserve's hawkish outlook has been a key factor undermining gold prices, with interest rates rising for the first time in over three years at the conclusion of the September policy meeting. St. Louis Fed President Alberto Musalem and Chicago Fed President Austan Goolsbee have explicitly backed further policy tightening to rein in inflation.

US President Donald Trump's comments on the Iran crisis have also contributed to increased geopolitical uncertainty, weighing on gold prices. However, US bond yields remain depressed below multi-year highs, which may limit losses for the precious metal.