Gold Slips as US-Iran Tensions Escalate and Inflation Worries Persist
The US and Iran conflict has entered its 153rd day, with renewed tensions in the Middle East after the US launched fresh strikes against Iran. The US Central Command described the attacks as 'a powerful response' to what it said were attempted Iranian strikes on American forces a day earlier.
Initially, gold rallied following the Federal Reserve's decision to leave interest rates unchanged, with Treasury yields retreating and the dollar weakening. However, this rally faded as investors digested Chair Kevin Warsh's remarks, in which he reiterated the Fed's commitment to returning inflation to its 2% target.
The US Dollar Index was little changed around 100.9, while benchmark Treasury yields recovered from their post-decision lows, limiting further upside for bullion. Markets now price a 64% probability of a September rate hike, down from around 81% before the Fed's policy announcement.