Gold edged higher on Tuesday, but remained close to its weakest level in nearly a month.
The metal continued to face the impact of the geopolitical developments in the Middle East.
Elevated crude prices, increasing inflation concerns and the subsequent increase in Treasury yields could continue to weigh on gold.
Markets are also turning to the Federal Reserve’s decision tomorrow. The institution is expected to keep interest rates unchanged, but any hawkish indication regarding how long policy may remain on hold could lift yields and the dollar, creating additional headwind for non-yielding assets like gold. Only one interest rate cut is expected later this year at the moment, although the Fed’s economic projections and comments could affect monetary policy forecasts.
However, downside risks could remain limited due to the safe-haven demand amid continued tensions in Eastern Europe and the ongoing purchases from central banks around the world. As a result, gold may continue to trade in a range in the near term, with direction likely to depend on the evolution of yields, the dollar, and geopolitical risks.
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