Gold prices edged lower in volatile trading on Wednesday as investors remained cautious ahead of a key U.S. Federal Reserve policy announcement and escalating geopolitical tensions between Israel and Iran.
As of 06:47 GMT, spot gold was down 0.2% at $3,381.10 per ounce, while U.S. gold futures also dipped 0.2% to $3,399.30. Traders appeared hesitant to make significant moves ahead of the Fed’s rate decision, expected later in the day.
“Gold fluctuated as investors tracked the escalation of risk in the Middle East,” noted analysts at ANZ in a research note. They added that lackluster U.S. economic data—particularly weak readings on retail sales, housing starts, and industrial production—have reinforced expectations for interest rate cuts later this year.
Tensions in the Middle East intensified further as Iran and Israel exchanged missile strikes for a sixth consecutive day. Despite calls for de-escalation from U.S. President Donald Trump, Iran refused to surrender unconditionally. In response, the U.S. has ramped up its military presence in the region, deploying additional fighter jets and extending the stay of other aircraft, according to U.S. officials.
Meanwhile, Tuesday’s economic data showed that U.S. retail sales fell more than expected in May, largely due to a slowdown in vehicle purchases after consumers rushed to buy ahead of potential tariff hikes.
The Federal Reserve is widely expected to keep interest rates unchanged during its June meeting. However, market participants are eager to review the Fed’s updated economic projections and interest rate outlook, which could offer clearer guidance on future monetary policy.
Goldman Sachs maintained its bullish forecast for gold, citing robust central bank demand and anticipated inflows into gold-backed ETFs driven by expected Fed rate cuts. The investment bank projects gold will climb to $3,700 per ounce by the end of 2025, and further to $4,000 by mid-2026.
In a sign of growing investor interest, the SPDR Gold Trust—the world’s largest gold-backed exchange-traded fund—reported a 0.43% rise in holdings, reaching 945.94 tonnes on Tuesday.
In other precious metals trading, spot silver slipped 0.2% to $37.14 per ounce. Platinum gained 0.7% to $1,270.88, and palladium rose 0.2% to $1,054.30.
As the market braces for the Federal Reserve’s decision and continues to monitor developments in the Middle East, gold is expected to remain sensitive to both geopolitical and economic catalysts.
