Gold prices moved higher during Wednesday’s Asian session, with XAU/USD returning above $4,400 and approaching its strongest level since early June. The rebound comes as investors prepare for the latest US Consumer Price Index (CPI), which could provide fresh direction for Federal Reserve policy expectations and the US Dollar.

The inflation report carries additional significance as elevated energy prices threaten to complicate the inflation outlook. Oil remains near a one-and-a-half-week high as expectations for a quick reopening of the Strait of Hormuz continue to fade. An adviser to Iran’s Supreme Leader, Mojtaba Khamenei, indicated that the strategic shipping route would remain restricted until Washington meets Tehran’s conditions.

Tensions have also intensified around other major shipping routes. Iran-backed Houthi forces in Yemen have stepped up attacks on vessels around the Red Sea and Bab el-Mandeb, including ships linked to Saudi Arabia. Continued disruption across these waterways has helped maintain a geopolitical risk premium in crude oil and raised concerns that higher energy costs could feed into broader inflation.

The prospect of an early resolution between Washington and Tehran has weakened further following tougher demands from both sides. Iran has outlined conditions for reopening the Strait of Hormuz, including compensation-related demands, while US President Donald Trump has raised separate demands concerning compensation for victims of the conflict. The widening gap between the two sides has reduced expectations that normal shipping activity will resume in the near term.

For the Federal Reserve, persistent inflation risks from energy markets are competing with evidence that the US labour market is losing momentum. Markets nevertheless continue to see a significant possibility of further monetary tightening, with traders pricing in more than a 75% probability of at least one Fed rate increase before the end of the year.

Higher interest-rate expectations could keep US Treasury yields elevated and provide support to the US Dollar. This creates a mixed environment for gold. While geopolitical uncertainty is strengthening demand for defensive assets, a stronger Dollar and higher yields could limit the upside for the non-yielding precious metal.

Broader geopolitical developments are also keeping investors cautious. North Korea conducted a ballistic missile launch ahead of major joint military exercises involving South Korea and the United States. Separately, Taiwan criticised planned naval exercises involving China and an Indonesian warship near the island’s eastern coast.

From a technical perspective, gold is trading around its 100-day Simple Moving Average (SMA), but several resistance levels remain overhead. The 50% Fibonacci retracement of the April-to-June decline represents an important hurdle, followed by the 200-day SMA near $4,500.51. A sustained move through this resistance zone could strengthen the bullish outlook and open the door to further gains.

On the downside, initial support sits around the 100-day SMA at $4,388.33. Below this level, attention shifts toward the 38.2% Fibonacci retracement at $4,298.48, followed by the 23.6% retracement at $4,161.40. A decisive break below the latter could expose the broader support area around $3,939.81.

For now, gold remains supported above $4,400, but the upcoming US CPI release could determine whether the metal can challenge the $4,500 region or face renewed selling pressure.

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