Gold edges lower to near $4,150 on US–Iran peace uncertainty, hawkish Fed signals

Gold price posts modest losses near $4,155 in Monday’s early Asian session.
Traders will closely watch the developments surrounding US-Iran peace talks.
Concerns about progress for the US-Iran peace deal and hawkish Fed signals could weigh on gold.

Lallalit Srijandorn FXStreet

Gold price (XAU/USD) trades with mild losses around $4,155 during the early Asian session on Monday. Traders continue to assess the developments surrounding the US-Iran peace talks in Switzerland. However, hawkish signals from the US Federal Reserve (Fed) might cap the upside for the precious metals in the near term.

US President Donald Trump over the weekend threatened strikes on Iran if Hezbollah keeps attacking Israel, raising concerns about progress for peace talks between Washington and Tehran. Iranian negotiators suspended high-stakes talks with the US in Switzerland in response to a flurry of verbal threats issued by Trump to strike Iran again, but people familiar said they were continuing.

“Gold’s rally on the back of the U.S.-Iran peace deal proved short-lived. The resurgent dollar, powered by the Fed’s newly hawkish tone under Kevin Warsh, has stolen the spotlight,” said Tim Waterer, chief market analyst at KCM Trade.

Goldman Sachs project gold prices to rise to $4,900 per ounce by December, lower than its earlier forecast of $5,400, as the bank doesn’t expect the US rate cut this year anymore.

Gold FAQs

Why do people invest in Gold?

Gold has played a key role in human’s history as it has been widely used as a store of value and medium of exchange. Currently, apart from its shine and usage for jewelry, the precious metal is widely seen as a safe-haven asset, meaning that it is considered a good investment during turbulent times. Gold is also widely seen as a hedge against inflation and against depreciating currencies as it doesn’t rely on any specific issuer or government.

Who buys the most Gold?

Central banks are the biggest Gold holders. In their aim to support their currencies in turbulent times, central banks tend to diversify their reserves and buy Gold to improve the perceived strength of the economy and the currency. High Gold reserves can be a source of trust for a country’s solvency. Central banks added 1,136 tonnes of Gold worth around $70 billion to their reserves in 2022, according to data from the World Gold Council. This is the highest yearly purchase since records began. Central banks from emerging economies such as China, India and Turkey are quickly increasing their Gold reserves.

How is Gold correlated with other assets?

Gold has an inverse correlation with the US Dollar and US Treasuries, which are both major reserve and safe-haven assets. When the Dollar depreciates, Gold tends to rise, enabling investors and central banks to diversify their assets in turbulent times. Gold is also inversely correlated with risk assets. A rally in the stock market tends to weaken Gold price, while sell-offs in riskier markets tend to favor the precious metal.

What does the price of Gold depend on?

The price can move due to a wide range of factors. Geopolitical instability or fears of a deep recession can quickly make Gold price escalate due to its safe-haven status. As a yield-less asset, Gold tends to rise with lower interest rates, while higher cost of money usually weighs down on the yellow metal. Still, most moves depend on how the US Dollar (USD) behaves as the asset is priced in dollars (XAU/USD). A strong Dollar tends to keep the price of Gold controlled, whereas a weaker Dollar is likely to push Gold prices up.

Author

Lallalit Srijandorn

FXStreet

Lallalit Srijandorn is a Parisian at heart. She has lived in France since 2019 and now becomes a digital entrepreneur based in Paris and Bangkok.

GBP/USD loses ground to near 1.3450 as traders await possible US-Iran deal

The GBP/USD pair drifts lower to near 1.3460 during the early European trading hours on Thursday. Conflicting rhetoric from the US and Iranian officials about a potential deal fuels market concerns, dragging the British Pound lower against the US Dollar. The US Initial Jobless Claims report will be released later on Thursday.

EUR/USD looks set to extend advance beyond 1.1600

The Euro trades broadly firm at around 1.1555 against the US Dollar during the Asian trading session. The major currency pair reflects strength as the US Dollar is broadly under pressure due to deteriorating United States employment conditions. At press time, the US Dollar Index (DXY) holds onto two-day losses at around 99.65.

How Wall Street rigs the game [Video]

In this week’s Live from the Vault, Andrew Maguire is joined by Peter Antico and Sean Stone to discuss the Paradigm of Money - an in-depth expose of financial market corruption, from naked shorting to the two-tier system that protects Wall Street.

Ripple and Stellar tumble as technical outlook deteriorates

Ripple and Stellar extend their declines, trading below $1.06 and $0.165, respectively, as selling pressure intensifies. In addition, weakening technical structures and bearish derivatives metrics suggest the correction for both altcoins could deepen if key support levels fail to hold. Derivatives data shows bearish bias among traders.

Why the WTI sell-off may be hiding a supply warning

Prices for the barrel of the American Oil benchmark have fallen sharply as hopes of a US-Iran agreement have resurfaced, but a deeply backwardated Oil curve, tight Cushing stocks and light speculative positioning all warn that the sell-off may have gone too far.

9-3: Is the Federal Reserve’s vote tally Warsh's new forward guidance?

The rate did not move. Neither did the statement, and that’s the more interesting fact. Set the July 29 Federal Open Market Committee (FOMC) statement beside the one issued on June 17, and the two documents are identical apart from a single verb and a paragraph at the bottom naming three dissenters.