Gold is currently holding steady near $4,400 per ounce as traders try to balance two opposing forces: Middle East tensions, which should support the precious metal as a safe haven, and the weakening US dollar against the Japanese yen, which works in its favor. The price has declined more than 25% from its January peak above $5,500, dropping to $4,000-$4,100 due to rising inflation expectations caused by surging oil prices linked to the US-Iran conflict. The weakening dollar, with USD/JPY near 154 at multi-month lows, is currently supporting gold prices by making the metal cheaper for foreign currency holders. The precious metal is experiencing an identity crisis, oscillating between its traditional role as a safe-haven asset and its growing sensitivity to Federal Reserve interest rate expectations.
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