Gold News: Could Israel-Iran Conflict and Dovish Fed Trigger the Next Gold Breakout?

Gold Holds Near 8-Week High as Traders Eye Fed and Middle East Risk

Gold prices hovered near an eight-week high on Tuesday, consolidating just under $3,451.53 as traders await fresh catalysts. With the market finding near-term support from a weaker U.S. dollar and declining Treasury yields, bullion remains buoyed by geopolitical concerns and dovish expectations for the Federal Reserve’s upcoming policy announcement.

At 11:50 GMT, XAU/USD is trading $3394.53, up $9.31 or +0.27%.

Middle East Conflict Lifts Safe-Haven Demand

Rising tensions between Israel and Iran have re-ignited safe-haven buying, pushing gold higher in recent sessions. Jordan’s King Abdullah warned the European Parliament that Israel’s widening conflict with Iran could escalate into a broader regional crisis, intensifying investor demand for gold. Market participants are watching for further developments as geopolitical headlines continue to support risk-averse positioning.

Han Tan of Exinity Group noted that gold retains an upward bias on signs of deepening conflict in the Middle East. “Barring knee-jerk spikes on a worsening geopolitical conflict, bullion bulls’ quest for pushing spot prices sustainably above $3,500 may only be fulfilled once the Fed signals a sooner-than-later rate cut,” Tan said.

Fed Decision in Focus as Traders Price in Rate Cuts

The Federal Reserve’s policy decision, due Wednesday, will be closely scrutinized for any dovish signals. With markets currently pricing in two rate cuts by year-end, any confirmation or deviation from this expectation could provide the next directional push for gold. Lower interest rates tend to support non-yielding bullion by reducing the opportunity cost of holding it.

Citi Trims Gold Outlook but Sees Rangebound Q3 Trading

Citi revised its short- and long-term gold price targets lower, now projecting a decline to below $3,000/oz by late 2025 or early 2026 on expectations of falling investment demand and improving global growth. The bank cut its 0-3 month and 6-12 month targets to $3,300 and $2,800 respectively, but sees prices holding between $3,100–$3,500 in Q3 as geopolitical risks and U.S. fiscal concerns provide support.

In its bullish scenario, gold could breach $3,500/oz in Q3 on stronger hedging and investment flows. In the bearish case, prices may dip below $3,000/oz as global tensions ease and U.S. growth firms—but Citi assigns only a 20% probability to each extreme outcome.

Gold Prices Forecast: Cautiously Bullish with $3,500 in Sight

Gold remains underpinned by geopolitical concerns and dovish Fed expectations, with near-term price action likely to stay constructive. Technical support lies at $3,348.54, while the $3,310–$3,301 cluster is key for any deeper correction.

A close above $3,451 would open the door for a test of the record $3,500.20. Traders should stay alert to Fed commentary and further Middle East headlines for confirmation of the next leg. Bias remains bullish while gold holds above $3,300.

More Information in our Economic Calendar.