HG MARKETS:

Gold (XAU/USD) edged lower to around $3,380 on Tuesday as a stronger U.S. dollar exerted downward pressure, despite elevated risk sentiment driven by escalating conflict in the Middle East. Investors appeared cautious, weighing developments between Israel and Iran alongside expectations for the upcoming Federal Reserve policy decision. The pullback in gold comes after a strong run, but underlying geopolitical risks continue to provide a supportive backdrop for the safe-haven asset.

The Israel–Iran conflict entered its sixth day, with reports confirming new Israeli airstrikes near Tehran and missile activity originating from Iran. U.S. President Donald Trump intensified the situation by convening a national security meeting, sparking speculation about deeper U.S. involvement. These developments have raised concerns about a broader regional conflict that could impact global stability and further elevate demand for gold as a hedge against uncertainty.

Market attention now shifts to the U.S. Federal Reserve’s interest rate decision scheduled for Wednesday at 6:00 p.m. UTC. While the Fed is widely expected to keep rates unchanged, investors will closely analyze the accompanying statement and press conference for clues about the central bank’s future policy direction. Any dovish signals—such as lower economic projections or a reduced “dot plot” outlook—could provide fresh momentum for gold to resume its upward trend.

Despite short-term price fluctuations, the long-term outlook for gold remains constructive. A recent survey by the World Gold Council revealed that 95% of central banks expect global gold reserves to increase over the next year. Notably, 43% of respondents indicated plans to boost their own gold holdings, reflecting a strong institutional belief in the metal’s value as a strategic reserve asset amid ongoing geopolitical and economic uncertainty.

Gold saw modest gains during the Asian and early European trading sessions on Wednesday ahead of the Fed’s announcement. While the interest rate decision itself may not trigger major market moves, any unexpected shifts in tone from Fed Chair Jerome Powell or upward revisions in the economic outlook could increase volatility. A hawkish message may pressure gold lower, while dovish signals or rising geopolitical tensions could push XAU/USD closer to the $3,400 level once again.