Gold declines to near $4,500 as renewed US‑Iran tensions, Fed tightening bets weigh

• Gold price edges lower to near $4,500 in Wednesday’s early Asian session. 

• Uncertainty over the US-Iran peace deal and the vital Strait of Hormuz weighs on the Gold price. 

• Markets currently expect a 25-basis-point Fed rate hike in December.

Gold price (XAU/USD) loses ground to around $4,500 during the early Asian session on Wednesday. The precious metal extends the decline as fresh US military strikes on Iran dimmed hopes of a peace deal and reinforced concerns that persistent inflation could keep interest rates higher for longer. 

Security in the Strait of Hormuz remained unclear after the US and Iran exchanged strikes on Tuesday, and US Central Command pushed back on reports that suggested the military was helping escort vessels.

The renewed clashes occurred just hours after US President Donald Trump said negotiations with Tehran to extend their ceasefire and reopen the crucial waterway are proceeding.  

“While hope of a US-Iran deal has offered some support, the situation remains fragile and persistent, as inflation fears continue to loom over precious metals,” said Ryan McKay, senior commodity strategist at TD Securities. 

Kevin Warsh was sworn in as US Federal Reserve (Fed) chairman on Friday. He took over the leadership of the US central bank amid growing expectations of tighter global monetary policy. It’s worth noting that Gold is often used amid geopolitical uncertainty but does not yield interest, making it less attractive when interest rates are high.

Traders are now pricing in a 39.0% chance that the Fed will raise interest rates by 25 basis points (bps) by year-end, according to the CME FedWatch tool.