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Gold languishes near daily low as geopolitical risks and hawkish Fed bets lift USD

  • Gold attracts fresh sellers on Tuesday and is pressured by reviving US Dollar demand.
  • Mixed signals surrounding a US-Iran peace deal keep geopolitical risk premium in play.
  • Fed rate hike bets further underpin the USD and exert pressure on the precious metal.

Gold (XAU/USD) maintains its offered tone through the first half of the European session and remains vulnerable below the $4,580 horizontal resistance, retested earlier this Tuesday. Mixed signals about a potential US-Iran peace deal keep a lid on the latest optimism, benefiting the safe-haven US Dollar (USD). Furthermore, persistent geopolitical uncertainties trigger a modest recovery in Crude Oil prices, reviving inflation fears and bolstering expectations for a more hawkish US Federal Reserve (Fed). This offers additional support to the USD and undermines the non-yielding yellow metal.

According to media reports, citing comments from Central Command, US forces conducted self-defense strikes in southern Iran on Monday. Targets included missile launch sites and Iranian boats attempting to emplace mines. This comes on top of major disagreements over Iran's nuclear program and a standoff over the Strait of Hormuz, dampening hopes for a deal to end a nearly three-month-old war. Moreover, US President Donald Trump has repeatedly threatened more military action against Iran if it does not accept a broader peace deal. This keeps geopolitical risk in play and helps the safe-haven USD regain positive traction following Monday's decline to an over one-week low, weighing on the Gold price.

Meanwhile, Iran has effectively halted nearly all shipping traffic through the Gulf since the war began, choking off roughly 20% of global oil supplies. Adding to this, the US blockade of Iranian ports, along with the latest development, helps the crude oil price rebound from a two-week low. This reignites concerns that the war-driven rise in energy prices will rekindle inflationary pressures and prompt major central banks, including the Fed, to adopt a more hawkish stance. The CME Group's FedWatch Tool indicates that traders are pricing in the possibility of at least one interest rate hike by the US central bank in 2026. This further underpins the USD and contributes to driving flows away from the non-yielding Gold.

The market focus now shifts to the release of the US Personal Consumption Expenditures (PCE) Price Index and the preliminary US GDP report, or the second estimates, due on Thursday. The crucial data will drive the USD demand and provide a fresh impetus to the XAU/USD pair. Apart from this, investors will keep a close eye on further developments surrounding the Middle East crisis, which might continue to infuse volatility in the global financial markets. In the meantime, Tuesday's release of the Conference Board's US Consumer Sentiment Index will be looked for short-term trading opportunities. That said, the fundamental backdrop suggests that the path of least resistance for the Gold price is to the downside.

XAU/USD 4-hour chart

Chart Analysis XAU/USD

Gold bears have the upper hand; $4,580 pivotal hurdle holds the key

From a technical perspective, the precious metal faced rejection near the $4,580 horizontal barrier on Monday and holds below the 100-period Exponential Moving Average (EMA) on the 4-hour chart, keeping a mildly bearish near-term tone. The price action remains constrained beneath this short-term barrier, even as the Moving Average Convergence Divergence (MACD) histogram stays in positive territory. That said, the Relative Strength Index (RSI) hovers near a neutral 47, suggesting only moderate upside momentum that has yet to challenge overhead resistance.

Meanwhile, the $4,580 horizontal zone is the first key resistance ahead of the 100-period EMA on the 4-hour chart near $4,593.73. A sustained break above the latter would be needed to ease the prevailing downside bias and open the way for a stronger recovery leg. Nevertheless, the XAU/USD pair remains vulnerable to further slippage, with intraday traders likely watching prior price lows on the 4-hour chart, around the $4,490-$4,485 region and the $4,450 area, as the next reference points for demand.

(The technical analysis of this story was written with the help of an AI tool.)

US Dollar Price Today

The table below shows the percentage change of US Dollar (USD) against listed major currencies today. US Dollar was the strongest against the New Zealand Dollar.

USDEURGBPJPYCADAUDNZDCHF
USD0.05%0.22%0.18%0.01%0.14%0.43%0.21%
EUR-0.05%0.20%0.11%-0.02%0.12%0.41%0.17%
GBP-0.22%-0.20%-0.09%-0.22%-0.08%0.21%-0.02%
JPY-0.18%-0.11%0.09%-0.16%-0.00%0.26%0.06%
CAD-0.01%0.02%0.22%0.16%0.17%0.44%0.22%
AUD-0.14%-0.12%0.08%0.00%-0.17%0.28%0.05%
NZD-0.43%-0.41%-0.21%-0.26%-0.44%-0.28%-0.22%
CHF-0.21%-0.17%0.02%-0.06%-0.22%-0.05%0.22%

The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the US Dollar from the left column and move along the horizontal line to the Japanese Yen, the percentage change displayed in the box will represent USD (base)/JPY (quote).

Author

Haresh Menghani

Haresh Menghani is a detail-oriented professional with 10+ years of extensive experience in analysing the global financial markets.

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