Middle East conflict keeps gold supported despite stronger dollar
Gold prices moved higher on Wednesday, with bullion trading above $4,130 per ounce as escalating tensions across the Middle East continued to boost demand for safe-haven assets. The gains came even as a stronger U.S. dollar and higher Treasury yields created headwinds, while investors weighed the inflationary impact of rising energy costs ahead of the Federal Reserve’s next policy decision.
At 02:08 ET (06:08 GMT), XAU/USD advanced 1.3% to $4,132.79 an ounce, while Gold Futures rose 1.5% to $4,137.09. XAG/USD gained 1.5% to $59.71 an ounce, while XPT/USD climbed 2.3% to $1,666.59.
Energy supply concerns remain in focus
Bullion extended the previous session’s strong performance, when prices climbed almost 2%, as traders continued to assess growing risks to global energy supplies that could keep inflation elevated and complicate the Federal Reserve’s monetary policy path.
Markets are now looking ahead to next week’s Fed meeting, where policymakers are widely expected to leave interest rates unchanged. However, investors will be watching closely for signals that officials intend to maintain a restrictive policy stance if higher energy prices continue to fuel inflation.
At the same time, U.S. President Donald Trump repeated that Washington remained willing to pursue negotiations with Iran, despite U.S. forces conducting an 11th straight night of military strikes and Tehran maintaining retaliatory attacks. Investors also remained focused on developments around key shipping routes, including the Strait of Hormuz and the Red Sea.
Crude oil prices continued to trade above $90 per barrel after extending their July rally, supported by ongoing attacks in the Gulf region and renewed concerns over shipping security that have heightened fears of potential supply interruptions.
Technical outlook points to improving momentum
Tony Sycamore, market analyst at IG, said gold’s rebound despite a stronger U.S. dollar and rising Treasury yields suggests investors are beginning to re-establish the metal’s traditional safe-haven role as geopolitical tensions intensify.
“Gold finished higher overnight, brushing off the headwinds of a stronger U.S. dollar and rising yields,” Sycamore said, adding that cleaner retail positioning may also be helping bullion regain its safe-haven appeal despite continued strength in U.S. equities.
Sycamore said initial signs of a base are emerging around the late-June low of $3,942. A sustained break above downtrend resistance near $4,120, followed by a move through the early-July high of $4,202, would strengthen the case for a broader recovery toward the 200-day moving average near $4,494.
He added that IG remains cautiously bullish on gold while prices hold above the late-June low, which continues to serve as the key technical reassessment level.
Silver also added to recent gains after surging more than 4% in the previous session, with investors continuing to track geopolitical developments and expectations for future Federal Reserve policy.