Gold attracts some buyers on US‑Iran peace memorandum, fading Fed hike bets
- Gold price edges higher in Tuesday’s Asian session.
- A memorandum of understanding to end the war has been signed by Trump, JD Vance, and the speaker of Iran's parliament.
- Swap traders priced in lower chances of a rate hike by December.
Gold price (XAU/USD) gains momentum during the Asian trading hours on Tuesday. The precious metal extends the rally after the United States (US) and Iran reached a comprehensive framework deal to end hostilities, easing inflation concerns.
Bloomberg reported on Monday that US President Donald Trump and Vice President JD Vance signed an electronic copy of a memorandum of understanding with Iran. Trump noted that the Strait of Hormuz “is already partially opened,” and “it’ll be completely opened” on Friday.
"The gold market is moving past the conflict and pricing it out. The peace deal news took down Treasury yields, the dollar, and oil, and those were the biggest inflation and cross asset risks," said Phillip Streible, chief market strategist at Blue Line Futures.
However, caution lingered as both sides offered differing accounts on key issues. Iran intends to collect certain “fees” in the critical waterway, while Trump said it would fully reopen Friday without tolls. Trump said on Monday that if Iran failed to reach a final nuclear accord with the US, he would restart military attacks on Tehran.
Bets on Federal Reserve (Fed) rate hikes receded after the framework deal, supporting the yellow metal, a non-yielding asset. Traders cut the chance of a US rate hike in December to 58% from nearly 70% last week, according to the CME FedWatch tool.
The Fed is due to announce its next policy decision on Wednesday. Economists expect the US central bank to keep its benchmark rate in a range of 3.50% to 3.75% as it waits to see how the war’s energy-price shock ripples through the economy.
XAU/USD daily chart
Gold keeps the bearish vibe in near term below the key 100-day SMA
In the daily chart, the near-term tone of XAU/USD stays bearish as price holds beneath the Bollinger middle band and well below the 100-day simple moving average (SMA), keeping the broader recovery structure capped. The Relative Strength Index (RSI) at about 43 sits below the midline, hinting at lingering downside pressure despite the recent attempt to stabilize.
On the topside, initial resistance emerges at the June 9 high of $4,363. The next hurdle to watch is the Bollinger SMA midline near $4,415, with the upper Bollinger band around $4,685 and the 100-day SMA at roughly $4,762 forming a broader supply zone if a rebound extends. On the downside, the lower Bollinger band at about $4,145 marks the next notable support, and a decisive break beneath this area would expose further weakness toward prior swing lows.
(The technical analysis of this story was written with the help of an AI tool.)
Interest rates FAQs
Interest rates are charged by financial institutions on loans to borrowers and are paid as interest to savers and depositors. They are influenced by base lending rates, which are set by central banks in response to changes in the economy. Central banks normally have a mandate to ensure price stability, which in most cases means targeting a core inflation rate of around 2%. If inflation falls below target the central bank may cut base lending rates, with a view to stimulating lending and boosting the economy. If inflation rises substantially above 2% it normally results in the central bank raising base lending rates in an attempt to lower inflation.
Higher interest rates generally help strengthen a country’s currency as they make it a more attractive place for global investors to park their money.
Higher interest rates overall weigh on the price of Gold because they increase the opportunity cost of holding Gold instead of investing in an interest-bearing asset or placing cash in the bank. If interest rates are high that usually pushes up the price of the US Dollar (USD), and since Gold is priced in Dollars, this has the effect of lowering the price of Gold.
The Fed funds rate is the overnight rate at which US banks lend to each other. It is the oft-quoted headline rate set by the Federal Reserve at its FOMC meetings. It is set as a range, for example 4.75%-5.00%, though the upper limit (in that case 5.00%) is the quoted figure. Market expectations for future Fed funds rate are tracked by the CME FedWatch tool, which shapes how many financial markets behave in anticipation of future Federal Reserve monetary policy decisions.
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.
