Gold Price Forecast: XAU/USD drifts lower below $3,350 amid de-escalation in the Middle East

• Gold price loses traction to around $3,325 in Wednesday’s early Asian session.

• The Iran-Israel ceasefire weighs on safe-haven assets like Gold.

• Fed’s Powell said US central bank should not hurry to adjust policy. 

The Gold price (XAU/USD) edges lower to near $3,325 during the early Asian session on Wednesday. The precious metal loses ground due to the de-escalation of tensions in the Middle East. Traders brace for the Federal Reserve’s (Fed) Chair Jerome Powell testifies later on Wednesday. 

The yellow metal retreats from recent highs after news of the ceasefire between Israel and Iran. A truce between both countries came into effect following four waves of Iranian attacks on Israeli-occupied territories. 

"The de-escalation of tensions in the Middle East is the primary factor that's weighing on gold. The safe-haven bid has diminished, and the market is in more of a risk-on mode," said Peter Grant, vice president and senior metals strategist at Zaner Metals.

Kansas City Fed President Jeff Schmid said on Wednesday the US central bank has time to study tariff effects on inflation before any rate decision. Schmid’s comments suggest he’s in no rush to lower borrowing costs, echoing what Fed Chair Jerome Powell said earlier Tuesday

Fed Chair Powell reiterated his stance that policymakers should not hurry to adjust policy, saying that the US central bank will continue to wait and see how the economy evolves before deciding whether to reduce its key interest rate. Less dovish remarks from the Fed Chair might help limit the Gold’s losses in the near term.

Money markets have fully priced in two Fed reductions by the end of 2025, with a first move in September far more likely than next month, though expectation of a July reduction rises from last week.