Gold prices are attempting a recovery from weekly lows near $3,360 today, as renewed geopolitical concerns in the Middle East counterbalance a hawkish signal from the US Federal Reserve.

The yellow metal found fresh buyers near $3,363 early Thursday following reports that the United States is considering military action against Iran as early as this weekend, with potential strikes on Iran’s Fordow nuclear facility. This development has significantly heightened risk aversion in Asian trading, boosting gold’s traditional safe-haven appeal. Iran’s Supreme Leader Ayatollah Ali Khamenei had issued a stern warning yesterday, stating that any US military involvement would result in “irreparable damage.”

However, gold’s upward movement is being tempered by a resurgent US Dollar, which is also benefiting from safe-haven demand. The Greenback gained strength after the Federal Reserve maintained its policy rates (4.25%-4.5%) and kept projections for two interest rate cuts this year. Yet, the Fed’s decision was perceived as “hawkish” by markets due to trimmed expectations for cuts in 2026 and 2027, along with an upgraded inflation outlook amidst persistent trade and geopolitical uncertainties.

Consequently, gold price breached a key support level at $3,377 on Wednesday after the Fed’s announcement. Looking ahead, the Juneteenth holiday in the US could lead to thin trading conditions, potentially exaggerating gold price movements. Traders will be closely monitoring developments in the Middle East for further direction