By: Economy Middle East

Gold prices edged lower on Wednesday as markets tracked ongoing developments in the Middle East and looked ahead to crucial U.S. economic data for signals on the Federal Reserve’s next interest rate decisions.

As of 4:35 GMT, spot gold fell 0.37 percent to $4,474.31 per ounce, while U.S. gold futures dipped 0.38 percent to $4,502.5 an ounce. The precious metal has largely remained within a narrow trading range in recent sessions, with mixed developments surrounding the Iran conflict keeping investors cautious.

In the UAE, gold rates also edged lower, with 24-carat gold losing AED4 to AED538.5 and 22-carat gold falling AED3.75 to AED498.5.

Additionally, 21-carat gold edged AED3.5 lower to AED478 and 18-carat gold eased AED3 to AED409.75.

Meanwhile, 14-carat gold lost AED2.5 to AED319.5.

Investors eye Mideast developments

Gold prices fell as investors continued to monitor developments in the Middle East as Israel pressed ahead with military operations in southern Lebanon, while Iran launched ballistic missile attacks targeting Kuwait and Bahrain. Meanwhile, U.S. forces carried out strikes on Iran’s Qeshm Island, according to a post by U.S. Central Command on X. The island is located near the Strait of Hormuz, a strategic chokepoint through which around one-fifth of global oil supplies pass.

Markets are also watching another round of talks involving Israel and Lebanon scheduled for Wednesday, while uncertainty continues to surround negotiations between Washington and Tehran.

Although Iran and the United States said last week that they had reached a tentative framework to end the conflict, the agreement has yet to receive formal approval from either side.

Adding to doubts over the prospects of a deal, Iranian media reported that communication between Tehran and Washington has been absent for several days, raising concerns that negotiations may have stalled. U.S. President Donald Trump, however, maintained that talks were ongoing and said he remained optimistic that an agreement could still be achieved.

Federal Reserve’s policy outlook in focus

While geopolitical tensions often boost demand for safe-haven assets like gold, rising oil prices and renewed inflation concerns have increased expectations that the Federal Reserve may maintain or even tighten monetary policy.

Recent data showed U.S. job openings unexpectedly increased in April, reinforcing bets that the Fed could keep interest rates elevated for an extended period.

Attention is now shifting to a series of upcoming U.S. economic releases due later on Wednesday, including the U.S. nonfarm payrolls release, along with the broader employment report due on Friday, for further signals on the Federal Reserve’s policy outlook.

Markets currently anticipate the Fed will hold rates steady at its June meeting, though investors still see a chance of a rate hike later in the year. Higher interest rates typically weigh on non-yielding assets like gold by raising the opportunity cost of holding bullion.

Further weighing on gold prices was a rise in the U.S. dollar index.

Other precious metals

The broader precious metals market tracked gold prices lower on Wednesday, with spot silver losing 0.54 percent to $74.83 and palladium losing 0.09 percent to $1,390.75. In addition, platinum fell 0.25 percent to $1,932.70.