Gold prices edged lower on Wednesday morning, losing steam after a two-day rally, as the metal slipped to $4,040 from Tuesday’s high of $4,069. The retreat comes after a sharp rebound in crude oil prices and as investors await the Federal Reserve’s closely watched interest rate decision.
Oil prices rise amid Middle East tensions
Brent crude, the global oil benchmark, climbed to $115, while West Texas Intermediate (WTI) advanced to $101.40. Natural gas also saw an uptick, rising 1.78% to $3.05. The resurgence in energy prices followed reports from the Wall Street Journal that President Donald Trump’s administration may launch major military operations against Iran after the upcoming midterm elections.
According to the report, US officials have cautioned Gulf allies about the risk of an intense escalation, suggesting the move is aimed at pushing Iran toward renewed negotiations. Additional deployments of military assets to the region and an increase in Israeli air operations near Iranian airspace have been observed in recent days.
Iran, in turn, has warned of retaliatory action, including potential strikes against vital oil and gas infrastructure in the region. Authorities in Tehran have cited the effectiveness of attacks carried out by Houthi groups against Saudi Arabia as an example of their growing capabilities.
Iranian officials have also indicated their intention to target critical civilian infrastructure such as airports, desalination facilities, and bridges should hostilities escalate. They have asserted that any new wave of attacks may be more severe than in previous confrontations.
Mini dictionary: Brent is the leading global benchmark price for crude oil, widely used as a reference point for oil pricing worldwide. WTI (West Texas Intermediate) is a key US benchmark oil price. Both play crucial roles in commodity and financial markets.
Market awaits Federal Reserve’s rate announcement
Gold’s near-term performance remains tied to the Federal Reserve, as the US central bank prepares to announce its latest policy decision. Economists widely expect the Fed to keep interest rates steady within a range of 3.75% to 4% as officials monitor the impact of previous increases.
A more hawkish stance by the central bank is considered negative for gold and other precious metals, as higher rates tend to strengthen the US dollar and increase the opportunity cost of holding non-yielding assets.
Recent labor market data showed the US economy added 29,000 jobs in the past month, with the unemployment rate rising to 4.3%. Inflation remains elevated, with the consumer price index (CPI) climbing 3.7%, continuing to outpace the Federal Reserve’s 2% goal.
Investors are also looking ahead to Thursday’s release of US gross domestic product (GDP) and personal consumption expenditure (PCE) data, which may provide further clues about the economy’s trajectory and the Fed’s next moves.
Gold technical outlook
Chart analysis indicates that gold peaked at $4,699 in August before declining below $4,000 last Friday. The metal rebounded slightly over the past two days as some investors sought buying opportunities.
However, gold continues to trade beneath its 50-day moving average and remains under the bearish influence of technical indicators such as the Supertrend. The current price action has formed a notable triple-bottom pattern at an important support level, a pattern sometimes associated with a potential reversal.
Despite this pattern, gold still faces downside risk and could revisit the critical $3,950 support zone if selling pressure resumes.
| Key metric | Current reading | Previous high/low |
|---|---|---|
| Gold price | $4,040 | Peak: $4,699 (August) Low: under $4,000 (last week) |
| Brent crude | $115 | Recent low: $114 |
| WTI crude | $101.40 | – |
| US CPI (inflation) | 3.7% | Fed target: 2.0% |
