Early in the European session on Wednesday, XAU/USD remains under pressure and shows signs of vulnerability near the psychologically important $4,500 level. The US dollar is holding its status as a safe-haven amid persistent geopolitical tensions.

Inflation risks are also rising; strengthening expectations that key central banks, including the Federal Reserve, will remain on a more hawkish path — a fundamentally negative backdrop for the yellow metal.

On Monday, US forces struck targets in southern Iran, saying the actions were defensive; reported targets included missile launchers and vessels suspected of laying mines. Iran's Foreign Ministry condemned the strikes as a violation of the ceasefire that has been in place since early April. The Islamic Revolutionary Guard Corps (IRGC) stressed Iran's right to retaliate in similar incidents. Supreme Leader Mojtaba Khamenei also stated that regional states will no longer serve as buffer zones for US military presence.

This geopolitical backdrop supports a risk premium and reinforces the dollar's position as the global reserve currency, putting additional pressure on gold prices.

At the same time, escalation between the US and Iran — including effective restrictions on shipping through the Strait of Hormuz and the blockade of Iranian ports — can keep oil prices elevated and further boost inflation expectations.

Against this backdrop, major central banks are showing a bias toward tightening monetary policy. The Reserve Bank of Australia (RBA) has already raised rates in May, and the European Central Bank (ECB), Bank of Japan (BoJ) and Reserve Bank of New Zealand (RBNZ) are expected by market participants to possibly follow suit later in the year. Markets also price roughly a 50% chance of a Fed rate hike by December. This strengthens the dollar and limits gold's upside potential, since gold does not pay interest.

No major US macro releases are expected on Wednesday that could materially move the market. Therefore, dollar moves will likely be driven by FOMC commentary and developments in the Middle East. Investors may take a wait-and-see stance ahead of Thursday's Personal Consumption Expenditures (PCE) price index and the advance US GDP estimate.

The overall fundamental backdrop remains favorable for XAU/USD bears, suggesting caution when considering long positions even during possible short-term corrective moves.

Technically, the metal shows a mildly bearish bias after a failed attempt to break horizontal resistance at $4,580 earlier this week. On the daily chart, that level coincides with the 14-day EMA. A decisive close above $4,580 is required to undermine the current downtrend. Oscillators are negative, indicating a bear advantage. Support sits at $4,450, the month's local low; a break below that level would accelerate the decline toward the 200-day SMA.