Gold (XAU/USD) climbed over 0.81% on Tuesday, trading at $4,344 after rebounding from daily lows of $4,306, as a US-Iran truce set to be signed on Friday eased geopolitical tensions and inflationary pressures. This development led to a sharp decline in oil prices over the past two days, which in turn pressured the US Dollar lower and supported gold prices [1]. The Federal Reserve began its two-day meeting on Tuesday, with expectations that it will keep rates unchanged and release the Summary of Economic Projections. Money markets are pricing in an 80% probability that the Fed will hold rates steady, with only a 20% chance of a rate hike, according to Prime Terminal data [1].
The new Fed Chair, Kevin Warsh, is set to lead his first post-meeting press conference, with investors closely watching his stance on policy, the balance sheet, and communication frequency. Meanwhile, US Treasury yields have fallen, with the 10-year note yield down nearly 5 basis points to 4.484%, further capping the US Dollar's advance. The US Dollar Index (DXY) fell 0.12% to 99.54 [1].
Other central banks also made notable moves: the Reserve Bank of Australia (RBA) held rates unchanged but signaled possible tightening if inflation rises, while the Bank of Japan (BoJ) raised rates by 25 basis points to 1% but did not provide forward guidance due to Governor Kazuo Ueda's hospitalization [1].
US economic data showed a slowdown in hiring, with the ADP Employment Change 4-week average at 25.5K, down from 29K previously. Upcoming US data releases include Retail Sales, expected to remain at 0.5% month-over-month in May, and Initial Jobless Claims [1].
Technically, gold faces resistance near $4,400, with the Relative Strength Index indicating a bearish stance but some near-term momentum for buyers. Gold needs to clear a downward resistance trendline and the 20-day Simple Moving Average around $4,400 to advance further [1].
CONCLUSION
Gold prices rose as easing geopolitical tensions and falling oil prices reduced expectations for a Federal Reserve rate hike. The market is closely watching the Fed's upcoming policy decision and Chair Kevin Warsh's first press conference for further direction. Technical indicators suggest gold may face resistance near $4,400 in the near term.