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Gold prices retreated on Thursday as the U.S. Federal Reserve's hawkish signals and geopolitical tensions in Iran bolstered the U.S. dollar. The precious metal, which briefly rebounded in Asian trading hours, failed to sustain gains above $4,450, its lowest level since March 30. Analysts attribute the decline to increased expectations of higher interest rates from the Fed and ongoing concerns over potential U.S.-Iran clashes, both of which strengthened the USD as a safe-haven asset.
For traders, the move highlights the inverse relationship between gold and the dollar. A stronger USD typically makes gold more expensive for holders of other currencies, reducing demand. Additionally, the Fed's tightening cycle has historically pressured non-yielding assets like gold. The recent pullback also reflects broader market risk-on sentiment, with investors favoring equities over traditional safe havens.
Looking ahead, investors should monitor the Fed's upcoming policy statements and inflation data for clues on rate trajectory. Geopolitical developments in the Middle East, particularly U.S.-Iran relations, could also sway the USD and gold. Technical traders may watch the $4,450 support level as a critical threshold for further declines.
