Gold price registers modest gains on Thursday as geopolitical tensions rose due to increasing rumors that the United States (US) might become involved in the Israel–Iran conflict. Nevertheless, a slightly hawkish Federal Reserve (Fed) caps the golden metal's advance. At the time of writing, XAU/USD trades at $3,373, up 0.13%.

Geopolitics continued to drive Gold's price action due to reports from several US news websites like The Wall Street Journal and CBS News revealing that plans of a US attack on Iran nuclear facilities had been approved by US President Donald Trump, who is weighing his options for a diplomatic exit.

Equity futures in the US are dropping, while the US Dollar remains bid amid thin trading as US markets remain closed in observance of the Juneteenth holiday.

On Wednesday, the Fed held rates unchanged and updated its economic projections, in which officials revealed that they're still expecting two cuts in 2025. Still, for the next year, they anticipate just one instead of two cuts, turning slightly hawkish as they see inflation remaining above the 2% goal.

Fed Chair Jerome Powell commented that policy is in a good place despite being moderately restrictive. He acknowledged that the impact of tariffs has yet to be felt, adding that someone — either the manufacturer, intermediary or consumer — has to pay for it.

Although Gold has dipped, it is typically sought during geopolitical tensions and lower interest rate environments; the Fed's restrictive tilt might prompt investors to turn toward other currencies alongside the US Dollar.

Ahead this week, traders will be eyeing the Philadelphia Fed Manufacturing Index for June, which is expected to move from -4 to -1.

Source: Fxstreet