Gold Holds Ground Amid Geopolitical Tensions and Weak U.S. Data

Gold prices remained steady in Asian trade on Wednesday, as investors awaited the Federal Reserve's interest rate decision and weighed escalating geopolitical risks in the Middle East. A spike in safe-haven demand kept gold from sliding further, following recent losses earlier in the week.

As of early trade, Spot Gold hovered at $3,388.25 per ounce, while August Futures held at $3,405.95/oz.

Why Gold Is Holding Firm

1. U.S.-Iran-Israel Conflict Intensifies

• The ongoing six-day aerial conflict between Israel and Iran has unnerved global markets.

• Reports that President Donald Trump is considering U.S. military action, including targeting Iran's nuclear infrastructure, spurred concerns about a broader war.

• Additional U.S. fighter aircraft deployments in the region are reinforcing investor risk aversion.

2. Weak U.S. Economic Signals

• Retail sales for May fell 0.9%, a sharper-than-expected drop.

• This reinforces expectations that the Fed may begin cutting rates later this year.

• Lower interest rates tend to benefit non-yielding assets like gold, as they reduce the opportunity cost of holding them.

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What's Next?

All eyes now turn to the Fed's policy statement. While no immediate rate changes are expected, any dovish signal could further anchor gold near its recent highs. Meanwhile, geopolitical instability and signs of economic softness continue to offer support to bullion prices.

For now, investors are staying cautious, with gold caught in the crossfire of both military and monetary developments.