Gold prices moved slightly higher on Wednesday as a weaker U.S. dollar provided support for the precious metal. Investors continued to monitor developments in U.S.-Iran peace negotiations while also assessing signals from the Federal Reserve on the future path of monetary policy.

Spot gold rose 0.2% to $4,516.76 per ounce as of 0051 GMT, while U.S. gold futures for June delivery gained 0.3% to $4,516.30 per ounce.

Weaker Dollar Supports Gold Demand

The U.S. dollar eased during the session, making dollar-denominated gold more affordable for buyers using other currencies. This helped support bullion prices, especially as investors remained cautious amid ongoing geopolitical uncertainty.

Gold often benefits when the dollar weakens, as lower currency pressure can improve international demand for the metal.

U.S.-Iran Tensions Remain in Focus

Market attention remained fixed on the conflict between the United States and Iran. Iran said on Tuesday that the U.S. had violated a ceasefire by striking targets near the contested Strait of Hormuz, raising concerns that peace efforts could face new complications.

At the same time, U.S. Secretary of State Marco Rubio said it could take “a few days” to negotiate a deal to halt the conflict. Both sides had previously shown signs of progress toward an initial agreement that could end hostilities and allow shipping activity through the Strait of Hormuz to resume.

Because the Strait of Hormuz is a key route for global energy shipments, any disruption in the region can influence oil prices, inflation expectations, and safe-haven demand for gold.

Fed Policy and Inflation Data Stay Important

Investors are also watching upcoming comments from Federal Reserve officials, including Fed Vice Chair Philip Jefferson and Governor Lisa Cook. Markets are looking for clues on how inflation risks may affect the Fed’s future policy stance.

U.S. consumer confidence eased in May as households became more concerned about inflation linked to the Iran war. Views on the labor market were also largely pessimistic, although consumers expected conditions to improve by the end of the year.

The market is now waiting for the U.S. Personal Consumption Expenditures, or PCE, data for April, scheduled for release on Thursday. This report is closely watched by the Fed and could provide further direction for interest rate expectations.

UBS Lowers Year-End Gold Forecast

Despite gold’s short-term recovery, UBS lowered its year-end gold price target by $400 to $5,500 per ounce. The bank cited persistent risks from higher yields and a stronger dollar as key pressures on the gold market.

This suggests that while geopolitical uncertainty may continue to support gold, monetary policy expectations and dollar movements remain major factors that could limit further upside.

Other Precious Metals

Silver also moved higher, rising 0.6% to $77.40 per ounce. Platinum was nearly unchanged at $1,957.75, while palladium gained 0.9% to $1,391.68.

Conclusion

Gold edged higher as a weaker dollar supported demand, but the market remains sensitive to developments in U.S.-Iran negotiations and upcoming signals from the Federal Reserve. While geopolitical uncertainty continues to offer support, inflation concerns, Treasury yields, and the dollar outlook will likely remain key drivers for gold prices in the near term.

Source: Reuters