Gold has staged a five percent rebound as tensions between the US and Iran cool, easing immediate concerns over oil-driven inflation spikes and interest rate volatility, according to Christopher Wong at OCBC. The precious metal’s recent recovery comes as geopolitical risk premiums deflate following de-escalation signals between the two nations, which had threatened supply disruptions and energy price surges.
However, Wong warns traders that gold’s upward momentum is likely to decelerate ahead of the upcoming Federal Reserve policy meeting. The metal faces critical headwinds unless three conditions align: crude oil prices soften further, Treasury yields decline, and market repricing of hawkish Fed expectations reaches its peak. Without these supportive factors materializing, gold may struggle to extend gains beyond current levels. The timing is particularly sensitive with the FOMC decision looming, which could reshape rate expectations and dollar strength.
FXnCO Insight
Gold traders should monitor oil price trajectories and Fed messaging closely, as further rallies hinge on continued energy weakness and dovish policy signals rather than geopolitical safe-haven demand alone.
Source: FXStreet