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Gold prices have retreated below the $4,700 level for the second consecutive day, pressured by renewed US-Iran tensions that bolstered the US dollar. The XAU/USD pair is testing key support levels near last week's intraday low as geopolitical risks drive safe-haven demand for the USD ahead of the Federal Reserve's policy decision. Market participants are closely watching whether the Fed will signal tighter monetary conditions, which could further weigh on gold's appeal as an inflation hedge.
The dollar's strength against gold is critical for traders, as the US currency and gold often move in inverse directions. With the FOMC meeting approaching, any hints of rate hikes or tapering could amplify dollar demand, pushing gold lower. Conversely, signs of dovish policy or renewed geopolitical instability might provide temporary support for gold. The current price action near $4,700 is a key technical level that could determine near-term momentum.
For MENA investors, the interplay between geopolitical risks and central bank policy will shape gold's trajectory. Regional investors should monitor the Fed's stance and US-Iran developments, as these factors could influence both the dollar and gold. Key watchpoints include the FOMC statement on Wednesday and any escalation in Middle East tensions that might shift capital flows between safe-haven assets.
