Gold Price (XAU/USD) balances below $2,400 in Wednesday’s European session. The precious metal struggles to recapture new all-time highs around $2,430 as Federal Reserve (Fed) Chair Jerome Powell emphasised maintaining the restrictive policy framework for a longer period. Powell and his colleagues seem to be leaning towards keeping interest rates higher for longer as inflation has remained stubborn and the labor demand remained strong.

The prospects for the Fed keeping interest rates higher for longer bodes well for the US Dollar and US bond yields. 10-year US Treasury yields fell slightly but remained close to a five-month high around 4.70%. The US Dollar Index (DXY), which measures the Greenback’s value against six major currencies, turns sideways after refreshing a five-month high near 106.40.

Meanwhile, deepening Middle East tensions hold strong ground for Gold. Israel prepares to respond to Iran’s attack. However, US President Joe Biden said it won’t support the counterattack from Israel. US Treasury Secretary Janet Yellen said on Tuesday that the US administration intends to levy new sanctions on Iran after its attack on Israel. Fresh sanctions on Iran could impact their capacity to export Oil.