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Gold prices fell to $4,738-$4,737 during the Asian session on Friday after failing to break above $4,800. The decline was driven by heightened geopolitical tensions in the Hormuz Strait, which raised inflation concerns, and expectations of a hawkish Federal Reserve ahead of the upcoming U.S. CPI data. The market remains cautious as investors balance risks from regional instability and potential Fed rate hikes against gold’s traditional role as an inflation hedge.
The move underscores the delicate interplay between geopolitical risks and monetary policy. While gold typically benefits from inflationary pressures and central bank tightening, recent volatility highlights uncertainty about how markets will react to conflicting signals. Traders are closely monitoring the U.S. CPI report for clarity on inflation trends and the Fed’s next steps, which could influence gold’s short-term trajectory.
For investors, the key focus will be on the U.S. CPI data release and how it shapes Fed policy expectations. Geopolitical developments in the Middle East, particularly around Hormuz, will also remain critical. Traders should watch for technical support levels around $4,700 and resistance near $4,800 to gauge potential price direction.
