Gold (XAU/USD) traded with a mild negative bias on Tuesday, lacking strong directional momentum as investors remained cautious due to uncertainty surrounding the potential resumption of US-Iran peace talks following renewed tensions in the Strait of Hormuz over the weekend [1]. At the time of writing, XAU/USD was trading around $4,794, down nearly 0.53% on the day, pressured by a modest uptick in the US Dollar (USD) [1].
Diplomatic efforts to end the US-Iran war are uncertain, with mixed signals about a second round of peace talks expected in Pakistan. US Vice President JD Vance is expected to lead a delegation to Islamabad for negotiations, and multiple media reports suggested Iran would send a delegation as well. However, Iran’s state broadcaster denied these claims, stating that no Iranian delegation has traveled to Islamabad for talks [1]. The current two-week ceasefire is set to expire on Wednesday, and US President Donald Trump said it is “highly unlikely” he will extend the truce, warning that fighting could resume if no agreement is reached. Trump also stated, “We will not open the Strait of Hormuz until a deal is signed” [1]. On the Iranian side, Mohammad Bagher Ghalibaf said Tehran is “preparing to show new cards on the battlefield” and would “not accept negotiations under the shadow of threats” [1].
Ongoing disruptions in the Strait of Hormuz, which is under a dual blockade by US naval forces and Iran, continue to support elevated Oil prices, keeping inflation risks in focus and reinforcing expectations that major central banks, including the Federal Reserve, may keep interest rates higher for longer [1]. While Gold is often seen as a hedge against inflation, higher borrowing costs tend to weigh on its appeal by increasing the opportunity cost of holding the non-yielding metal. As a result, Gold remains under pressure in the near term, even as geopolitical risks provide some support and keep prices largely range-bound [1].
Looking ahead, traders are expected to closely monitor developments around US-Iran talks and the ceasefire deadline, as well as movements in the US Dollar and Oil prices for fresh directional cues. Attention will also be on the upcoming US Retail Sales data and the confirmation hearing of Kevin Warsh, Donald Trump’s nominee for Federal Reserve Chair, scheduled for 14:00 GMT before the Senate Banking Committee [1]. From a technical perspective, the near-term outlook for XAU/USD remains neutral, with price hovering just below the 20-period Bollinger Band middle line near $4,805 [1].
CONCLUSION
Gold prices are under mild pressure as markets await clarity on US-Iran peace talks and the impending ceasefire deadline, with elevated Oil prices and a stronger US Dollar contributing to the cautious sentiment. The near-term outlook remains neutral, and traders are expected to monitor geopolitical developments and key US economic events for further direction. Market participants remain wary of renewed conflict and its potential impact on Gold and broader financial markets.