Markets Weigh Middle East Truce, Fed Rate Path as Gold Steady

Gold prices remained under pressure, holding onto earlier losses caused by easing geopolitical tensions in the Middle East. The apparent stability of a fragile ceasefire between Iran and Israel reduced demand for safe-haven assets like gold, leading to a pullback in the precious metal's price.

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In early Asian trading, bullion hovered near $3,325 an ounce, showing little movement after falling 1.3% in the previous session. The recent truce between Israel and Iran has so far remained intact, despite both countries accusing each other of initial violations. U.S. President Donald Trump publicly criticized both sides for their actions, helping to calm markets and ease concerns over the possibility of further conflict.

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Gold has surged 27% since the beginning of the year, driven by persistent global uncertainty, trade disputes, and aggressive gold purchases by central banks. That rally pushed the precious metal to a record high of roughly $3,500 an ounce in April.

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However, in recent weeks, the upward momentum has paused, with prices largely moving sideways. For the past month, gold has mostly fluctuated within a narrow range of $3,300 to $3,400 as investors balance easing Middle East tensions with broader macroeconomic uncertainties.

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One of the key factors continuing to support gold is growing unease around the U.S. economy. This is being fueled in part by President Trump’s aggressive trade policy and looming tariff deadlines, which have raised concerns about the outlook for global growth. At the same time, investors are closely monitoring signals from the Federal Reserve, which could begin cutting interest rates again if economic conditions weaken.

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Adding to the uncertainty was a report showing that U.S. consumer confidence declined unexpectedly in June. The drop reflects persistent anxiety about how trade-related disruptions may affect the broader economy and the labor market. Weaker consumer sentiment can be an early sign of economic slowdown, which in turn could push the Fed to adopt a more accommodative policy stance in the coming months.

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While interest rate cuts tend to support gold by lowering the opportunity cost of holding non-yielding assets, Fed Chair Jerome Powell offered a cautious message. He reiterated this week that there is no immediate need to rush into rate cuts, despite mounting evidence of economic strain. His comments served as a reminder that while the central bank may eventually lower rates, the timeline remains uncertain.

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Gold was trading steady at $3,326.53 an ounce as of 8:18 a.m. in Singapore, according to Bloomberg data. The Bloomberg Dollar Spot Index, which tracks the performance of the greenback against a basket of major currencies, was also unchanged, offering little additional support or pressure on bullion prices.

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Among other precious metals, silver and palladium prices were little changed in early trading, while platinum registered a slight decline. These metals, which are more closely tied to industrial demand, have been sensitive to shifts in economic outlook and expectations around global manufacturing activity.

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Overall, gold remains caught in a tug-of-war between diminishing geopolitical risks and lingering economic uncertainty. While easing tensions in the Middle East have temporarily reduced its appeal as a haven, ongoing concerns over trade, inflation, and interest rate policy continue to provide a supportive backdrop. Investors remain cautious, watching closely for developments in Washington's trade agenda and any further signs of weakness in the U.S. economy that could prompt a shift in the Federal Reserve’s policy stance.

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As long as the ceasefire between Iran and Israel holds and no new geopolitical shocks emerge, gold may remain range-bound in the near term. However, with several unresolved global issues still looming — including upcoming trade deadlines and central bank meetings — market participants are unlikely to stray far from this safe-haven asset for long.

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