Gold Fails to Gain Momentum as Middle East Tensions Escalate and Fed Keeps Rates Unchanged

Gold struggled to gain momentum as the US Dollar's weakness was offset by escalating tensions in the Middle East. The precious metal started the week on a bullish note, but quickly erased its gains after Iran clarified that it was not engaged in direct ceasefire talks with the US.

The conflict in the region continued to escalate, with reports of Saudi forces joining the fray and Iran claiming an attack on a US military base in Jordan. Gold turned south and lost over 1% on Tuesday.

However, the USD came under pressure on Wednesday after the Federal Reserve left interest rates unchanged, despite market expectations of a rate hike. The decision was seen as dovish by some, but Fed Chairman Kevin Warsh emphasized that 'only one target and it is 2%' and that 'we will deliver the 2% target.'

The USD's weakness allowed Gold to stage a rebound, but technical analysis suggests that bulls are hesitant to make a move. The Relative Strength Index (RSI) indicator on the daily chart fell short of clearing the 50 neutral level.