Gold Prices Stuck in Consolidative Phase Amid Rebounding USD
Gold prices remain stuck in a sideways consolidative price move through the first half of the European session, trading above $4,050. A rebounding US Dollar (USD) is capping the upside for gold, but receding hopes for a US-Iran peace deal and reduced expectations for a Federal Reserve rate hike are limiting further USD appreciation.
US President Donald Trump's call to cancel planned attacks on Iran has fueled optimism about a diplomatic resolution to the five-month-old war. Additionally, OPEC+'s decision to increase production in September triggered a steep decline in crude oil prices, easing inflation fears and tempering bets for a more aggressive Fed policy tightening.
Traders seem hesitant to place fresh bearish bets on the USD and are waiting for further developments around the Middle East crisis. As such, the focus remains on incoming geopolitical headlines that may continue to infuse volatility in financial markets and drive USD demand.