US-Iran Standoff and Fed Hawkishness Double Pressure, Gold Price Falls to Two-Month Low

May 28 (Investinglive) — Gold prices slid to a two-month low this week amid stalled U.S.-Iran talks and mounting hawkish risks from the Federal Reserve. While markets had priced in an imminent bilateral deal and a potential reopening of the Hormuz Strait, no official announcements have materialized—only a flurry of unconfirmed reports and market chatter. Over the past few days, both sides have carried out limited military strikes, but the U.S. maintains that its ceasefire agreement remains in effect. On the Fed side, a growing number of policymakers are pushing to abandon the central bank’s dovish stance, with the June FOMC meeting emerging as the critical juncture for this policy shift. Looking ahead, if no breakthrough in U.S.-Iran relations occurs before the June meeting, persistent high inflation and resilient U.S. economic data could deliver a hawkish surprise to markets. In the near term, a resolution that reopens the Hormuz Strait would likely push oil prices lower and lift expectations for future rate cuts, which would support gold. Conversely, a prolonged closure of the strait would keep oil prices elevated, raising the risk that the Fed will be forced to implement additional rate hikes. (FXStreet)