Gold (XAU/USD) is gradually retreating from a one-and-a-half-week high recorded earlier on Tuesday, holding slightly above the $4,550 level while still posting gains for the third consecutive day.
The trigger for the correction in oil prices was reports that US President Donald Trump is prepared to suspend the military operation against Iran, even if traffic through the Strait of Hormuz remains significantly restricted. This has eased inflation concerns and led to a decline in US Treasury yields, prompting profit-taking in the dollar and supporting the commodities sector, including gold.
However, the diplomatic outlook remains extremely fragile: Iran has once again indicated its unwillingness to engage in direct negotiations with Washington, limiting the potential for a swift resolution of the conflict. An additional source of uncertainty is the continued buildup of US military presence in the region, which reduces expectations for a rapid de-escalation. These developments could support oil prices, increase inflation risks, and maintain conditions for a tighter monetary policy stance by central banks, including the US Federal Reserve.
At the same time, expectations of a prolonged period of high interest rates are limiting gold's upward potential. Market participants, judging by positioning, have largely revised their forecasts regarding Fed rate cuts and are increasingly pricing in the possibility of rate hikes toward the end of the year. This dynamic strengthens demand for the dollar and prevents gold from developing a sustained upward trend.
Under these conditions, investors prefer a wait-and-see approach, assessing whether buyers can maintain prices above key technical support levels, including the 200-day simple moving average (SMA) near $4,100 and the four-month low recorded last week. Traders are focusing on upcoming releases of JOLTS job openings data and the Conference Board consumer confidence index. Together with speeches by FOMC representatives, this data may influence the dollar's direction and set the short-term trend for gold prices.
Despite this, geopolitical developments remain the main driver of market volatility, continuing to play a decisive role in demand for safe-haven assets.
From a technical perspective, the short-term outlook is cautiously bearish, as gold prices are trading below the 100-day SMA. However, the 200-day SMA continues to rise, reinforcing the long-term bullish structure despite the current correction. The RSI (Relative Strength Index) has recovered from oversold territory, but as long as oscillators remain negative, bulls lack sufficient strength.