Gold prices hit a two-month low on Wednesday, weighed down by growing market confidence that the Federal Reserve will implement interest rate hikes to combat persistent inflation. The ongoing conflict between the U.S. and Iran, particularly the instability surrounding the Strait of Hormuz, has driven energy prices higher and intensified worries over the economic outlook. While there was a brief fluctuation in gold prices following reports of a potential framework deal between Tehran and Washington to reopen shipping routes, the broader market remains fixated on the reality that rising interest rates generally diminish the appeal of non-yielding assets like bullion.

Market analysts note that the Federal Reserve is under significant pressure to address inflation, with expectations mounting for a 25-basis-point rate hike before the year concludes. Minneapolis Fed President Neel Kashkari recently emphasized the need to prioritize containing inflationary risks, leaving investors to look toward upcoming Personal Consumption Expenditures data for further clarity on monetary policy. Meanwhile, the precious metals sector saw broader declines, with silver slipping by 2.8% and platinum dropping 2%, as the combination of high interest rates and shifting demand continues to pressure the market.