|

Gold edges lower as strong US Dollar and US-Iran peace talks uncertainty weigh

  • Gold trades with a bearish bias as a firmer US Dollar caps upside.
  • US-Iran talks remain in doubt ahead of the ceasefire deadline, keeping markets cautious.
  • Technically, XAU/USD maintains a bearish bias on the 4-hour chart below $4,800.

Gold (XAU/USD) trades with a negative bias on Tuesday as fading hopes for US-Iran peace talks weigh on sentiment, following renewed tensions in the Strait of Hormuz over the weekend. At the time of writing, XAU/USD is trading around $4,700, down nearly 2.50% on the day, pressured by a modest rebound in the US Dollar (USD).

At the same time, firm US data released earlier in the day added to the pressure on Gold. Retail Sales rose by 1.7% MoM in March, beating expectations of 1.4% and accelerating from February’s 0.7% increase. In addition, the ADP Employment Change 4-week average increased to 54.8K from 39K.

US-Iran talks in doubt as ceasefire deadline approaches

Diplomatic efforts to end the US-Iran war remain uncertain, with mixed signals surrounding a potential second round of peace talks expected in Pakistan. Multiple media reports suggested that Iran is sending a delegation for the talks. However, Iran’s state broadcaster pushed back on these claims, stating in a Telegram post that “so far, no delegation from Iran has travelled to Islamabad, neither a primary nor a secondary, neither initial nor follow-up.”

Meanwhile, a White House official said that US Vice President JD Vance has not yet departed for the talks. With the current two-week ceasefire set to expire on Wednesday, markets remain cautious. US President Donald Trump said on Monday it is “highly unlikely” that he will extend the truce, adding, “We will not open the Strait of Hormuz until a deal is signed.” Trump has also warned that fighting could resume if no agreement is reached.

On the Iranian side, Mohammad Bagher Ghalibaf said Tehran has been “preparing to show new cards on the battlefield” and would “not accept negotiations under the shadow of threats.”

Higher Oil prices keep pressure on Gold

Meanwhile, ongoing disruptions in the Strait of Hormuz, which remains under a dual blockade by US naval forces and Iran, continue to support elevated Oil prices. This is keeping inflation risks in focus and reinforcing expectations that major central banks, including the Federal Reserve (Fed), may keep interest rates higher for longer.

While Gold is often seen as a hedge against inflation, higher borrowing costs tend to weigh on its appeal by increasing the opportunity cost of holding the non-yielding metal. As a result, the precious metal remains under pressure in the near term, even as geopolitical risks provide some support and keep prices largely range-bound.

Fed Chair nominee Kevin Warsh said during his Senate testimony that the Fed needs a new inflation framework and a broader “regime change” in the conduct of monetary policy.

Looking ahead, traders will closely monitor developments around US-Iran talks and the ceasefire deadline, as well as movements in the US Dollar and Oil prices for fresh directional cues.

Technical analysis: XAU/USD stuck in range as momentum weakens

In the four-hour chart, XAU/USD maintains a bearish near-term bias, as price holds beneath the 20-period Bollinger simple moving average center line near $4,795.92 and even the lower band at roughly $4,725 now acts as immediate overhead supply. The pair is sliding along the lower side of the Bollinger envelope, while the 14-period Relative Strength Index has retreated to about 35, hinting at emerging oversold conditions but not yet signaling a decisive bullish reversal, and the Average Directional Index near 14 suggests the downtrend remains weak rather than impulsive.

On the topside, initial resistance is located at the lower Bollinger Band around $4,725, followed by the middle band near $4,796 and then the upper band close to $4,867, where any recovery is likely to face renewed selling pressure. With no meaningful four-hour support levels from the Bollinger framework below the market, sustained trading under the $4,725 area would leave XAU/USD vulnerable to further downside extension unless oversold momentum on the RSI triggers a corrective bounce back toward the mid-band region.

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

Gold FAQs

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.

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.

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.

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

Vishal Chaturvedi

I am a macro-focused research analyst with over four years of experience covering forex and commodities market. I enjoy breaking down complex economic trends and turning them into clear, actionable insights that help traders stay ahead of the curve.

More from Vishal Chaturvedi
Share:

Editor's Picks

GBP/USD: Downward-sloping trendline near 1.3470 remains key barrier

The British pound faces selling pressure against its major currency peers, trading 0.1% lower at around 1.3420 against the US Dollar during the European trading session on Tuesday.

EUR/USD flatlines above 1.1500, awaits US jobs data

EUR/USD holds steady around 1.1505 in European trading hours on Tuesday. Markets remain cautious ahead of a slew of US jobs data, starting with the JOLTS Job Openings Survey later today. However, the downside appears capped by hot Eurozone inflation in July, bolstering the case for a European Central Bank rate hike at the next meeting.

Gold consolidates above $4,050 amid Fed hike bets and Iran uncertainty

Gold seesaws between tepid gains and minor losses during the Asian session as traders seem hesitant and opt to wait for further developments surrounding the Middle East crisis. The US Dollar struggles to build on the previous day's solid bounce from the lowest level since Mid-June and acts as a tailwind for the bullion. However, the uncertainty over US-Iran peace talks helps limit the downside for the buck.

Ripple and Stellar steady as derivatives data points to easing downside pressure

Ripple and Stellar show mixed price action, with XRP holding above the key $1 support zone while XLM faces rejection at $0.173. Meanwhile, improving derivatives metrics alongside fading bearish momentum suggest that the downside pressure may be easing for both altcoins. Derivatives data shows mild bullish sentiment among traders.

US JOLTs report in focus
In the US, the June JOLTs report will be in the spotlight. Job openings have increased modestly this year, which has historically predicted rising wage cost pressures ahead. June trade balance data will also be released in the afternoon and the preliminary reading pointed towards a stable trade deficit from May. The Fed's Schmid (non-voter, hawk) will be on the wires overnight.
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.