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Investing.com-- Gold prices held steady in Asian trade on Wednesday as investors tread carefully ahead of the Federal Reserve’s interest rate decision later in the day, while safe-haven demand was supported by intensifying Israel–Iran conflict and reports of possible direct U.S. military involvement.
Gold erased most of its recent gains earlier this week after reports emerged that Iran was seeking a ceasefire. But escalating military strikes and U.S. President Donald Trump’s stern warnings targeting Iran led back to a risk-off mood.
Spot Gold was unchanged at $3,388.25 an ounce, while Gold Futures for August were also muted at $3,405.95/oz by 01:56 ET (05:56 GMT).
Gold supported by Middle East tensions, weak US data
The geopolitical backdrop darkened as Iran and Israel entered a sixth day of aerial exchanges on Wednesday.
The situation escalated further with the Wall Street Journal reporting President Donald Trump is considering possible U.S. military strikes against Iran, including targeting its nuclear command, and demanding Tehran’s "unconditional surrender."
A Reuters report stated that the U.S. military is deploying more fighter aircraft to the Middle East and extending the deployment of other warplanes.
Though the Pentagon called the buildup defensive, it fueled concerns that the U.S. may join the conflict against Iran.
This geopolitical strain coincided with cooling U.S. economic data. May retail sales slid 0.9%, reinforcing investor expectations of a Fed rate cut later this year.
The Fed meeting concludes Wednesday, with markets anticipating a policy hold but keenly focused on updated economic forecasts.
As world markets await fresh Fed guidance, elevated Middle East tensions and weak U.S. indicators are expected to continue propping up bullion prices.
Metal markets gain on weak dollar
Broader metal prices saw an uptick today, as a weaker greenback made the metals cheaper for foreign buyers.
The US Dollar Index was trading 0.2% lower in Asian trade on Wednesday.
Silver Futures rose 0.6% to $37.365 per ounce, while Platinum Futures added 0.5% to $1,269.90/oz.
Benchmark Copper Futures on the London Metal Exchange rose 0.3% to $9,703.75 a ton, while U.S. Copper Futures jumped 0.9% to $4.83923 a pound.