Gold (XAU/USD) reversed its Monday gains and resumed a broader bearish trend on Tuesday, testing support at the $4,100 level after failing to extend gains beyond $4,220 on Monday [1]. The precious metal has depreciated by nearly $250 since the Iran conflict began, reflecting sustained downward pressure [1]. The US Dollar has strengthened this week, supported by higher Treasury yields as markets increasingly anticipate Federal Reserve rate hikes later in the year [1]. According to the CME Group’s Fed Watch Tool, the probability of a rate hike in September has surged to 70%, up from less than 30% a week ago, with markets nearly fully pricing in at least a quarter-point hike before year-end [1].
Investor sentiment remains cautious due to ongoing uncertainty around the US-Iran peace deal. Iranian negotiators stated that technical talks have concluded, but there is no clear plan to reopen the key Strait of Hormuz, and the critical nuclear issue remains unresolved [1]. While a tense calm in Lebanon offers some hope, the risk of derailment persists [1].
From a technical perspective, XAU/USD trades at $4,120 with a bearish near-term bias, as downside attempts have so far been contained above $4,100 [1]. Momentum indicators, including the Relative Strength Index (14) retreating toward the low-40s and the MACD remaining below zero, suggest that rallies are likely to encounter selling pressure at resistance levels [1]. Immediate support is at $4,100, with further downside targets at the year-to-date low of $4,023 and the late October 2025 low near $3,885 [1]. On the upside, resistance is seen at Monday’s high just above $4,220, and further at the $4,370-$4,380 area [1].
The market’s focus remains on the interplay between Fed policy expectations and geopolitical developments, both of which are exerting significant influence on gold prices [1].
CONCLUSION
Gold prices are under significant bearish pressure, driven by rising expectations of a Federal Reserve rate hike and ongoing geopolitical uncertainty, particularly regarding the US-Iran situation. With technical indicators pointing to further downside risk and key support levels in focus, market sentiment remains cautious and reactive to both monetary policy signals and geopolitical headlines.