Gold falls below $4,400 as Fed outlook and geopolitics weigh

Gold futures declined on Wednesday, slipping below $4,400 per ounce as a combination of shifting Federal Reserve policy expectations and easing geopolitical risks in the Middle East weighed on the precious metal.

The pullback follows a recent rally that pushed prices to multi-year highs, driven by expectations of imminent U.S. interest rate cuts. However, comments from Fed officials suggesting a more cautious approach to monetary easing have tempered those bets, reducing gold’s appeal as a non-yielding asset.

Analysts noted that the market’s focus has shifted to upcoming U.S. economic data, including jobs and inflation reports, which could influence the timing and magnitude of any policy adjustments by the central bank. The CME FedWatch Tool currently indicates a roughly 60% probability of a rate cut at the September Federal Open Market Committee meeting, down from earlier projections.

Geopolitical developments in the Strait of Hormuz, a critical oil shipping route, also provided temporary support to gold prices earlier this week. Concerns over potential disruptions to global oil supply had driven safe-haven demand. However, reports of de-escalating tensions in the region have reduced that premium, contributing to the metal’s retreat.

Technical indicators suggest gold may face further pressure in the near term, with resistance seen around the $4,450 level and support at $4,350. Market participants will closely monitor U.S. Treasury yields and the U.S. dollar, both of which typically move inversely to gold prices.

The decline in gold comes as investors reassess the balance between monetary policy expectations and geopolitical risk premiums, factors that have driven volatility in the commodity’s recent trading sessions.