Price Movement
At 01:52 ET (05:52 GMT) on Tuesday, spot gold (XAU/USD) slipped 0.14% to $3,995.64 an ounce, while gold futures edged 0.09% lower to $4,002.05. The metal had fallen nearly 3% on Monday, briefly breaching the $4,000‑per‑ounce level for the first time in three weeks, leaving prices largely subdued on the day.
Fed Commentary
Federal Reserve Governor Christopher Waller said policymakers may need to raise interest rates in the near term if underlying inflation continues to point to broad‑based price pressures. His hawkish remarks reinforced expectations that the Fed could tighten monetary policy further.
Market Expectations
ANZ analysts noted that the escalation in the Middle East and the prospect of higher energy prices have heightened inflation concerns, leading markets to price a 43% probability of a rate hike at the Fed’s July 28‑29 policy meeting. Investors are awaiting the June U.S. consumer‑price index (CPI) release and Federal Reserve Chair Kevin Warsh’s congressional testimony later Tuesday, both of which are expected to shape the Fed’s rate‑path outlook.
Geopolitical Context
Tensions in the Middle East intensified after President Donald Trump announced that the United States would reinstate its blockade of Iranian shipping in the Gulf and declared Washington the “Guardian of the Hormuz Strait.” The administration also proposed a 20% fee on cargoes transiting the strategic waterway. The move raised concerns about renewed supply disruptions, reviving worries that higher energy costs could sustain inflationary pressures.
Market Implications
Higher borrowing costs typically reduce the appeal of non‑yielding assets such as gold by increasing the opportunity cost of holding bullion, while also supporting Treasury yields and the U.S. dollar. Consequently, despite safe‑haven demand from geopolitical risk, the metal’s price remained muted ahead of the upcoming U.S. CPI data and Fed policy signals.