USD surges, gold plunges $200 amid escalating Middle East tensions

Gold prices (XAU/USD) dropped sharply on Wednesday, losing about $200 from the intraday high of nearly $5,380 as the US dollar strengthened, putting pressure on the precious metal. The greenback reached its highest level since January 20, amid diminishing expectations of aggressive Fed easing, making non-yielding assets like gold less attractive.

However, escalating tensions in the Middle East have limited the decline. Iran continues to launch missiles and drones in the Persian Gulf region, including an attack near the US Embassy in Riyadh. The Iranian Revolutionary Guard announced the closure of the Strait of Hormuz, raising fears of a broader conflict.

US Secretary of State Marco Rubio warned that attacks could increase in the next 24 hours, while President Donald Trump emphasized the risk of escalation.