Gold slipped to around $5,180 per ounce on Wednesday as investors weighed escalating tensions in the Middle East against fresh US inflation data and the resulting implications for Federal Reserve policy. The US and Israel carried out some of the heaviest airstrikes of the conflict on Iran, while the war has effectively closed the Strait of Hormuz, driving oil prices higher and stoking fears of renewed global inflationary pressures. Consequently, markets around the world have scaled back expectations for interest rate cuts by major central banks.
In the US, CPI data showed that inflation held steady at 2.4% in February, before the onset of the Iran conflict. The Fed is widely expected to leave interest rates unchanged at its meeting next week, with markets now pricing in just a single 25-basis-point cut this year, likely in September. Despite the recent pullback, gold has risen more than 20% year to date, repeatedly setting fresh record highs amid elevated geopolitical and economic uncertainty.
