Gold Price Slides Toward $4,600 as Middle East Uncertainty Weighs on Market Sentiment
Gold prices remain under bearish pressure, slipping toward the $4,600 level on Tuesday and marking a fresh three-week low. Ongoing uncertainty surrounding the second round of US–Iran peace negotiations has supported the US Dollar, drawing in buyers and putting additional pressure on the precious metal. However, expectations that the Federal Reserve may adopt a less hawkish stance could help limit further downside for non-yielding gold ahead of key central bank events.
From a technical perspective, gold recently failed to sustain gains above the 200-period Simple Moving Average (SMA) on the 4-hour chart. A decisive break below the $4,655 support zone would reinforce the bearish outlook. Meanwhile, the Relative Strength Index (RSI) hovers near 41, slightly below the midpoint, while the Moving Average Convergence Divergence (MACD) remains in negative territory with its signal line above the MACD line. These indicators suggest that downside momentum persists, though not yet at an aggressive pace.
On the upside, immediate resistance is seen at the 200-period SMA near $4,723. A sustained move above this level would be needed to ease selling pressure and open the door for a stronger recovery. Traders are also likely to watch for the formation of a new base or bullish signals from RSI and MACD before confirming a more durable bottom.
Geopolitical tensions continue to influence gold market dynamics. Hopes for diplomatic progress in resolving the Iran conflict have faded after US President Donald Trump canceled engagements involving key envoys. Iran has reportedly submitted a revised proposal to the US, excluding discussions of its nuclear program until the conflict ends and disputes over Gulf shipments are resolved. However, the proposal has been met with dissatisfaction, particularly due to its limited focus on nuclear issues. The ongoing stalemate, including tensions around the Strait of Hormuz, continues to support the US Dollar’s safe-haven appeal, weighing on gold prices.
That said, gains in the US Dollar may be capped by shifting expectations around Federal Reserve policy. According to the CME FedWatch Tool, markets are pricing in roughly a 35% chance of a rate cut by the end of the year. This could discourage aggressive bullish bets on the dollar and help stabilize gold prices ahead of the highly anticipated two-day FOMC meeting starting Tuesday.
Investors will closely monitor the post-meeting press conference, particularly comments from Federal Reserve Chair Jerome Powell, for clues on future monetary policy direction. In addition, any new developments in the Middle East crisis will remain a key driver of both USD strength and gold price movements.
Overall, the current fundamental backdrop appears to favor bearish sentiment in XAU/USD, increasing the likelihood of a breakdown from the short-term trading range that has persisted since the beginning of the month.