Gold Struggles as US-Iran Conflict Escalates and Fed Holds Rates Steady

The ongoing US-Iran conflict has pushed oil prices up and down, leaving gold in a precarious position. The Federal Reserve's decision to keep interest rates steady came as no surprise, but it does not bode well for gold investors.

Iranian officials have made it clear that they will not relinquish control of the Hormuz Strait, and tensions between the two nations are escalating by the day. The US has imposed new sanctions on Iran's oil trade, targeting eight tankers and 10 entities.

The shipping industry is struggling to find alternative routes for crude exports, with several tankers using the northern route out of the Red Sea through the Suez Canal or loading oil at Sidi Kerir on Egypt's Mediterranean coast. However, this route cannot fully replace the Bab al-Mandeb, which has seen a 22% drop in transits since the Houthi blockade was announced.

The conflict is driving up energy prices and putting pressure on inflation, but gold investors are still waiting for a clear signal to buy. Despite testing its day's high at $4,084.90, gold started to reflect the persisting bearish pressure, trading at $4,067.70.