- Gold falls sharply, accelerating its corrective move below $4,700.
- The hawkish Fed stance is reducing the appeal of non-yielding assets.
- Geopolitical tensions in the Middle East could limit the extent of the decline.
Gold (XAU/USD) has fallen sharply to its lowest level since early February, hovering around $4,680, pressured by a strong US Dollar (USD). This downside move is largely driven by the Federal Reserve’s (Fed) hawkish stance, which has reinforced expectations that interest rates will remain higher for longer. Recent inflation data, including a notable rise in the Producer Price Index (PPI), along with upgraded economic projections, support this outlook and reduce the likelihood of near-term rate cuts, weighing on non-yielding assets like Gold.
At the same time, rising geopolitical tensions in the Middle East are providing some support to the precious metal. The escalation involving Iran, Israel, and the United States (US), particularly attacks on key energy infrastructure, has increased demand for safe-haven assets. This uncertain environment is helping to limit Gold’s downside despite the pressure from US monetary policy.
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