Gold Recovers After the Shock: Market Awaits Signals from the Fed and Inflation Data
Introduction: A Breather After the Sell-Off
Tuesday brought long-awaited relief to gold investors. After plunging nearly 3% on Monday—the sharpest one-day decline in more than a month—the precious metal began to recover. XAU/USD rose by 0.54% to $4,022.87 per ounce, while gold futures gained 0.59% to reach $4,029.22. Silver and platinum also moved higher, rising by 0.63% and 0.42%, respectively.
However, this increase does not represent a confident recovery but rather a cautious pause. The market has entered a holding pattern ahead of two key events: the release of US inflation data and testimony by Federal Reserve Chair Kevin Warsh before Congress. These events are likely to determine the direction of gold prices over the coming weeks.
Tensions in the Middle East continue to escalate, while comments from Federal Reserve Governor Christopher Waller have added fuel to the fire by strengthening expectations of a possible interest rate hike. In this article, we will examine all the factors currently affecting gold and attempt to determine where the precious metal may move in the coming days.
The Middle East Conflict: A Double Blow to Gold
Escalation and Transit Fees
President Trump announced the reinstatement of a blockade on Iranian shipping in the Persian Gulf and described Washington as the “Guardian of the Strait of Hormuz.” Moreover, he proposed introducing a 20% fee on cargo passing through this strategically important waterway.
The announcement represented a sharp escalation of US pressure on Tehran and raised doubts about the durability of the fragile ceasefire reached in June. Markets reacted immediately: oil prices continued to rise, while investors began reassessing their inflation expectations.
Inflation Risks
Rising energy prices are reviving concerns that higher energy costs could fuel inflation and complicate the Federal Reserve’s efforts to return price growth to its target level.
For gold, this creates...
