Stronger US dollar suppresses safe-haven demand, gold remains in a volatile correction
International gold prices continued to remain weak during the European session on Tuesday,
US President Trump stated on Monday that at the request of Qatar, Saudi Arabia and the United Arab Emirates, the US has temporarily suspended its planned military action against Iran. Trump also emphasized that if the two sides cannot reach an agreement, the US military is still prepared for a full-scale military operation.
While the market is somewhat optimistic about a potential diplomatic agreement, Iran’s tough stance is keeping investors cautious. In response to Trump’s warning that “time is running out”, Iranian President Pezezhchiyan stated that Iran will not bow to any external power, stressing that relevant negotiations must be based on protecting national interests.
Meanwhile, expectations of a high Federal Reserve interest rate continue to be an important factor suppressing gold. Recent US inflation data continues to exceed market expectations, and the rise in energy prices has further intensified concerns about future inflationary pressures.
Currently, the 30-year US Treasury yield remains near its highest levels since 2023, reflecting persistent market concerns about long-term inflation and fiscal deficits. The high-yield environment significantly boosts the attractiveness of US dollar assets, while also weakening the allocation value of non-yielding assets like gold.
Additionally, the market is now waiting for the release of the Federal Reserve meeting minutes on Wednesday, hoping to find more clues about the future path of interest rates. Until the Fed policy outlook becomes clearer, investors are maintaining a generally cautious stance toward the gold market.
Market analysts said that as long as US yields remain high, gold may continue to face downward pressure in the short term.
From a technical perspective, gold on the 1-hour chart still maintains a bearish structure. Gold prices continue to trade below the 100-hour Simple Moving Average (SMA), indicating that the short-term bearish trend has not been reversed. Although there was a previous rebound from lows which briefly improved market sentiment, overall bullish momentum has begun to weaken. The MACD indicator, though still above the zero axis, shows momentum values dropping significantly toward 3.32, reflecting weakening bullish strength. Meanwhile, the Relative Strength Index (RSI) is near 51.7, suggesting limited rebound momentum and the absence of a clear uptrend.
On the daily chart, after a previous surge, gold has entered an obvious high-level consolidation phase. The 20-day Exponential Moving Average has started to flatten, while the RSI continues to fall from the overbought zone, reflecting cooling bullish momentum. Although the MACD still maintains a bullish structure, the red bars are narrowing, indicating the uptrend is slowing.
Overall, the current gold market is in a tug-of-war between "geopolitical risk cooling" and "the Fed’s hawkish stance". In the short term, Fed policy expectations, US bond yields, and changes in the Middle East situation will continue to dominate gold price trends.
Editor’s summary
Gold currently faces obvious macro pressures. While uncertainty in the Middle East remains, expectations for a diplomatic solution are reducing safe-haven demand for gold. At the same time, high US inflation and high interest rates strengthen the advantages of the dollar and US Treasury yields, keeping gold under overall pressure. From a technical perspective, $4,500 has become a key psychological support zone. If this level is lost, further downside may open up. However, if the Middle East situation deteriorates again, or if the Fed delivers a dovish surprise, gold could quickly regain safe-haven buying support. Market volatility is expected to remain elevated in the future.
Editor: Zhu Hennan
Disclaimer: The content of this article solely reflects the author's opinion and does not represent the platform in any capacity. This article is not intended to serve as a reference for making investment decisions.
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