Gold’s tightrope: Navigating ceasefires and Fed signals

Gold (XAU/USD) is sandwiched between the dwindled intensity of geopolitical pressures and the softening tone of the global monetary policy makers. The yellow metal is currently trading at the level of approximately $3,316 and it has fallen even below the 9-period EMA on the 4-hour chart and it suggests the loss of bullish momentum. Technically, things have already started to turn sour in the market structure: the price action has created a lower high; the support level of $3,293 to $3,300 last tested on June 9 is now widely under pressure once again. An evident violation may send the metal to lower downside levels of around 3 275 and 3 260.

Momentum indicators prove this change. The Relative Strength Index (RSI) is hovering around 42 on the H4 chart indicating that it is at the dance floor and MACD histogram is far below there in the red zone with the bearish cross involved. Combined with high sell side volume, the chart message is simple: unless buyers come in with much gusto at the $3,293 floor, bears can take the next move. The breach of this level on a confirmed basis might even lead to a wider loss, to the regions and The levels of more than 3240/ and 3200.

However, there are these technical risks that stand side by side with an effective counterweight; monetary easing expectations. As the U.S. Dollar Index (DXY) has stained below 105.00, federal reserve pivot has been slowly being priced in the markets. The dovish statements released in the last few days of Chair Powell, Governor Waller and Bowman have enhanced the belief that the Fed would start reducing rates as soon as July. The next Core PCE inflation report due on June 28 will be a key determinant of rate policy and interest rates it will be essential to corroborate the vision of disinflationary pressures in order to entrench the narrative and policy stance of rate cuts as will being the basis to assist it gain the fundamental underpinning to gold with the decreasing cost of holding non-yielding assets.

The other one-half of the gold crossfire is geopolitics. A conventional barricade demand has lessened by a wide margin as a result of excellent progress in the Middle East in the diplomatic field. NATO-brokered peace talks between Israel and Iran have been held in the sidelines during this week, but with a low profile approach, have helped the situation in general across the world. Mounting concerns of a broader confrontation have waned and capital is spinning off defensive investments, such as gold, to risk-on investments, including equities and currency functions with higher rates of returns. It is this abatement of the geopolitical tensions that are well and truly topping gold on the rise in the short run.

Then, however, there may be complacency too soon. Gold may lose the safe-haven status, but at any sign of inflation surprises to the upside or when the ceasefire is broken and tensions run high once again, the precious metal will reclaim its status as a safe haven very quickly. Commerzbank researchers maintain a medium-term bullish perspective toward gold, as they still consider that a dovish Fed, weak course of the dollar, and the very vulnerable geopolitical environment, give the precious metal an energy in the long run. The FXStreet also estimates that bullish correction to the zone of $3,365 -$3,370 is possible, although upon condition that the support level of $3,293 will be created.

To sum up, gold is literally stuck in the crossfire between geopolitical calm which is killing its demand, and central bank cuts which are offering macro stability. The deficiency of this balance is rather evident through the charts: in short term, it is structurally weak but in the medium sense resilient. The question now is on the ability of the June 9 low of 3,293.51. A rebound here has the potential to restore the control on the bulls, and a loss here would most probably indicate retracement toward a deeper value. Up to that moment there will be volatility of the metal which will be in a tug of war between the ceasefires and the central banks.