Gold (XAU/USD) came under renewed selling pressure during Tuesday’s Asian session, reversing most of the previous day’s move higher to horizontal resistance at $4,580. Mixed signals around a potential US-Iran peace deal are keeping recent optimism in check and benefiting the safe-haven US dollar (USD). Moreover, continuing geopolitical uncertainty is causing a moderate rebound in oil prices, reviving inflation concerns and strengthening expectations for a more hawkish decision by the US Federal Reserve (Fed). This provides additional support for the US dollar and weakens the volatile yellow metal.
According to media reports citing comments from Central Command, US forces carried out self-defense attacks in southern Iran on Monday. Targets included missile launch sites and Iranian boats attempting to deploy mines. This comes amid earnest disagreements over Iran’s nuclear program and the conflict over the Strait of Hormuz, dampening hopes for an agreement to end the nearly three-month war. Moreover, US President Donald Trump has repeatedly threatened to take further military action against Iran if it does not accept a broader peace agreement. This keeps geopolitical risks in play and helps the safe-haven USD regain positive traction after falling to its lowest level in over a week on Monday, which weighed on the gold price.
Meanwhile, Iran has effectively halted almost all ship traffic through the Persian Gulf since the beginning of the war, cutting off about 20% of global oil supplies. Moreover, the US blockade of Iranian ports and recent developments are helping oil prices rebound from their two-week low. This reignites fears that the war-induced rise in energy prices will reignite inflationary pressures and prompt major central banks, including the Fed, to adopt a more hawkish stance. The CME Group’s FedWatch tool indicates that investors are pricing in the possibility of at least one interest rate enhance by the US central bank in 2026. This further strengthens the dollar and contributes to reversing the outflow of unprofitable gold.
Market attention is now focused on the release of the US Personal Consumption Expenditures (PCE) Price Index and the US Flash GDP Report, the second estimates due on Thursday. Key data will drive demand for USD and provide up-to-date impetus to the XAU/USD pair. Additionally, investors will closely monitor further developments around the crisis in the Middle East, which may continue to cause volatility in global financial markets. Meanwhile, we’ll be looking for near-term trading opportunities in Tuesday’s release of the Conference Board’s U.S. Consumer Sentiment Index. That said, the fundamental backdrop suggests that the path of least resistance for the gold price is down.
XAU/USD 4-hour chart
Gold looks risk-prone as it trades below the $4,580 threshold and 100-period EMA in the fourth half of the year
From a technical perspective, the precious metal faced rejection near the $4,580 horizontal barrier on Monday and is holding below the 100-period exponential moving average (EMA) on the 4-hour chart, maintaining a slightly bearish tone in the compact term. Price action remains constrained below this short-term barrier even as the moving average divergence (MACD) histogram remains positive. That said, the relative strength index (RSI) is hovering around the neutral level of 47, suggesting only moderate growth momentum that has yet to break above 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 necessary to ease the prevailing downtrend and pave the way for a stronger economic recovery. Nevertheless, the XAU/USD pair remains vulnerable to further slippage, and intraday traders are likely to watch the earlier price lows on the 4-hour chart near the $4,490-$4,485 region and the $4,450 area as next benchmarks for demand.
(The technical analysis for this story was written with the support of an AI tool.)
Gold FAQs
Gold has played a key role in human history as it has been widely used as a store of value and a medium of exchange. Nowadays, beyond its luster and employ in jewelry, the precious metal is widely viewed as a safe-haven asset, meaning it is considered a good investment in turbulent times. Gold is also widely seen as a hedge against inflation and currency depreciation because it is not tied to any particular issuer or government.
Central banks are the largest holders of gold. To support their currencies in turbulent times, central banks typically diversify their reserves and purchase gold to improve the perceived strength of the economy and currency. High gold reserves may provide a source of confidence in the country’s solvency. According to data from the World Gold Council, central banks added 1,136 tons of gold to their reserves in 2022, worth about $70 billion. This is the highest annual purchase since registration began. Central banks in emerging economies such as China, India and Turkey are rapidly increasing their gold reserves.
Gold has an inverse correlation with the US dollar and US treasury bonds, which are both major reserve assets and unthreatening haven assets. When the dollar depreciates, gold tends to rise, allowing investors and central banks to diversify their holdings in turbulent times. Gold is also inversely correlated with risky assets. A rally in the stock market tends to weaken the price of gold, while sell-offs in riskier markets support the precious metal.
The price may change due to many factors. Geopolitical instability or fear of a deep recession can quickly cause gold prices to rise due to its safe-haven status. Gold, as a non-yielding asset, tends to rise at lower interest rates, while the higher cost of money tends to weigh on the yellow metal. Despite this, most of the movements depend on the behavior of the US dollar (USD) when the asset is priced in dollars (XAU/USD). A powerful dollar tends to keep the gold price in check, while a weaker dollar will likely cause gold prices to rise.
