The XAU/USD Gold spot price is holding flat for Tuesday's trading session after the weekend's geopolitical strain from an escalating Gaza Strip conflict sent Gold climbing nearly 3% from a near-term low of $1,810.51.
Gold's response to a ramping up of geopolitical tensions in the Middle East is likely subdued by inflation expectations and investors leery of the Federal Reserve's (Fed) rate outlook; the Fed has kept the door wide open for an additional rate hike before the end of 2023, but a mix of dovish and hawkish comments from different Fed officials on Tuesday are obscuring the way forward.
Fed's Kashkari: We may have to raises rates further if the economy stays too strong
NY Fed: Year-ahead expected inflation edges higher to 3.7% from 3.6% in August
Inflation risks remain a key driver of Gold spot prices, and investors will be keeping a close eye on the Fed before making any major market moves.
Upshot commodity prices on geopolitical tensions and inflation fears will likely remain muted moving forward until investors draw a sharper forecast on the Fed's "dot plot" rate hike expectations looking towards 2024.
Spot Gold remains firmly bearish in the medium-term despite the recent rebound in XAU/USD prices, trading far below the 200-day Simple Moving Average (SMA) near $1,930, and an extended bullish move for Gold will quickly run into resistance from the 50-day SMA currently sinking into the $1,900 handle.
XAU/USD sees itself well off 2023's highs near $2,080, with spot Gold down over 10.5%, or $220 per ounce.
If Gold prices continue to sink, the XAU/USD will be set to make a fresh low for the year and make a challenge of the $1,800 major handle, a price that hasn't been by spot Gold since last December.

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