Gold holds firm as softer US inflation, Middle East tensions support prices

Gold prices remained resilient on Wednesday, supported by softer-than-expected US inflation data and heightened geopolitical tensions in the Middle East, according to Pinky Yadav, Commodity Fundamental Analyst at Choice Broking.

COMEX gold traded near $4,031 an ounce, while MCX gold edged higher to around ₹1,41,644 per 10 grams. US inflation slowed to 3.5% year-on-year in June, while core inflation eased to 2.6%, reducing expectations of near-term interest rate hikes by the Federal Reserve.

“The probability of a July rate hike has fallen to 12% from 40%, while expectations for a September hike have eased to 59% from 74%,” Yadav said.

She added that Fed Chair Kevin Warsh reaffirmed the central bank’s commitment to bringing inflation back to its 2% target, while highlighting the resilience of the US economy, supported by strong business investment.

Gold also continued to draw safe-haven demand following US President Donald Trump’s reinstatement of a blockade on Iranian vessels, which has escalated geopolitical tensions in the region.

Investors are now awaiting key US economic releases, including the Core Producer Price Index (PPI) and Warsh’s testimony, for further clues on the Federal Reserve’s policy path.