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Gold prices are under pressure as the Federal Reserve's (Fed) hawkish stance overshadows a tentative US-Iran peace deal, pushing XAU/USD to a one-week low of $4,121. The Fed's recent monetary policy announcement, emphasizing higher-for-longer interest rates, has weakened gold's appeal as investors favor the US dollar. Geopolitical tensions between the US and Iran have historically supported safe-haven demand for gold, but current market focus remains on central bank policy.
The Fed's tightening cycle has created a bearish environment for gold, as higher interest rates increase the opportunity cost of holding non-yielding assets. Traders are closely monitoring Fed officials' comments for clues about future rate hikes, which could further weigh on gold prices. The US-Iran peace deal, while positive for global stability, lacks immediate economic impact to offset the Fed's influence.
For Gulf investors, the dollar's strength against gold is critical, as Saudi Arabia's currency is pegged to the USD. A stronger dollar reduces gold's competitiveness for regional buyers. Key levels to watch include $4,100 support and $4,250 resistance. Market participants should monitor Fed minutes and geopolitical developments in the Middle East for potential reversals.
