Summary:
Gold is trading in a limited range as markets respond to Middle East concerns and cautious Fed signals.
Introduction:
Gold prices stood steady on Thursday as investors concentrated on escalating tensions in the Middle East and a cautious message by the US Federal Reserve. The metal (XAU/USD) was moving in between $3,340 and $3,400 and is maintaining a narrow range which has been in place over the last seven days. Although the Juneteenth holiday in the United States resulted in subdued trading activity, market reactions to pivotal economic and geopolitical events were still evident. In this article, an expert from Primehedge has explained recent fundamentals of markets in detail.
Fed Leaves Rates Unchanged, Indicating Cuts Later
As anticipated, the Federal Reserve maintained interest rates between 4.25% to 4.50% on Wednesday, June 18. Two rate reductions by the end of 2025 were suggested by the central bank’s revised estimates.
But, Fed Chair Jerome Powell spoke carefully during his press conference. He mentioned persistent inflation worries and stated that future choices will be based on incoming data. This reduced expectations of quick rate cuts.
Gold rose at first, nearing the $3,400 mark. But Powell’s comments supported the US Dollar, which limited further gains for Gold.
The US Treasury long-term yields fell as the markets reflected the expectation of reduced rates. Conversely, short-term yields rose following comments by Powell, indicating confusion in the direction of the Fed. This mixed reaction kept Gold in a narrow range.
Middle East Conflict Supports Gold Prices
Tensions between Israel and Iran continue to grow. The risk of US military involvement is increasing. This is supporting the safe-haven demand for Gold.
This week, President Donald Trump will have his second meeting with his national security team to consider potential U.S. moves. Iran’s growing enriched uranium stockpile has heightened concerns that it could be getting closer to developing a nuclear bomb. The US and Israel have said this would be unacceptable.
Markets are also watching the Strait of Hormuz, a key shipping route for global oil. About 20% of the world’s oil passes through this narrow channel. Any disruption there could drive oil prices higher and push up inflation.
Trump Comments Add to Uncertainty
On Wednesday, President Trump called for a large 2.5% interest rate cut. Additionally, he called Fed Chair Jerome Powell “stupid.” These comments came ahead of Powell’s expected exit in May 2026.
Trump’s comments increased political noise surrounding the Fed, but they did not immediately affect the market. Investors are increasingly more conscious of any threats to the independence of the central bank.
Powell said that although the US economy is currently “solid,” tariffs are a concern. He emphasized that before taking any action, the Fed will continue to monitor the data.
Inflation Concerns May Limit Gold Gains
In the short term, the geopolitical risk might favor Gold, but increasing US yields might restrict the gains. The Fed may postpone rate cuts if inflation continues to rise or if economic data continues to show strength. Bond rates would rise as a result, and non-yielding assets like gold would lose appeal.
This means Gold could stay in a tight range for now. The $3,400 level remains strong resistance. A move above it could show more buying interest. On the other hand, falling below $3,340 may suggest weakening demand.
Conclusion
Gold is now in the middle of two strong powers, geopolitical tensions in the Middle East and a dovish but cautious Fed. Short-term support may come from safe-haven flows, but increasing rates and a strong US dollar might offset any gains.
Gold is probably going to remain range-bound in the near future due to low trade volumes and continuous uncertainty. Markets will keep an eye on changes in US monetary policy as well as any indications that the Israel-Iran crisis is becoming worse.
Disclaimer: This article is purely informational and doesn’t offer trading or financial advice. Its content is not intended to be investment advice. We do not guarantee the validity of the information, especially when it pertains to third-party references or hyperlinks.
