Gold Struggles Amid Hawkish Fed Outlook
Gold prices struggled to gain traction on Tuesday, slipping below $4,350 after a modest uptick in Asian trading. The US Federal Reserve's hawkish stance is seen as a major factor holding back gold, despite softer US yields.
The Fed's updated Summary of Economic Projections showed officials expect at least one more rate hike this year, with Boston Fed President Susan Collins and St. Louis Fed President Alberto Musalem backing further policy tightening due to elevated inflation risks.
However, the recent pullback in oil prices has cooled immediate inflation fears, pulling US bond yields away from multi-year highs and capping the US Dollar below its highest level since late July.
The geopolitical risk premium remains in play, with intensifying fighting between Iran-backed Houthi forces in Yemen and Saudi Arabia limiting downside for crude oil prices and favoring USD bulls.