Analyst: US-Iran conflict triggers price pressure, gold prices may face greater downside risk

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Deep Tide TechFlow News — On May 27, Wednesday, gold prices edged lower for a second consecutive trading day. The renewed tensions between the United States and Iran have weakened hopes that the conflict could be resolved quickly, thereby keeping inflation concerns in place and casting a shadow over interest-rate expectations. Spot gold briefly fell 0.3%, to $4,494.16 per ounce. On Tuesday, Iran said the U.S. attacked targets near the Strait of Hormuz, violating the ceasefire agreement, which could make efforts to end the war even more complicated.

FXTM senior research analyst Lukman Otunuga said: “As market hopes for a peace agreement between the U.S. and Iran waver, gold prices have already pulled back and are approaching the $4,450 support level. In addition, driven by price pressure caused by the conflict, expectations for Fed rate hikes are rising steadily, which also adds further downward pressure to gold prices.” “Ultimately, if more signs emerge that price pressure is increasing, it could further reinforce market bets that the Fed will keep interest rates at a higher level for a longer period of time, which would expose gold to greater downside risk.” (Jin10)

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