Gold (XAU/USD) traded with mild gains during the early Asian session on Tuesday, extending its rally after the United States and Iran reached a comprehensive framework deal to end hostilities. According to Bloomberg, US President Donald Trump and Vice President JD Vance signed an electronic memorandum of understanding with Iran, with Trump stating that the Strait of Hormuz 'is already partially opened,' and will be 'completely opened' on Friday [1].
The news of the peace deal led to a decline in Treasury yields, the US dollar, and oil prices, which were previously seen as major inflation and cross-asset risks. Phillip Streible, chief market strategist at Blue Line Futures, noted that 'the gold market is moving past the conflict and pricing it out,' as the peace deal reduced inflation concerns [1].
Following the framework deal, market bets on a Federal Reserve rate hike in December dropped to 58% from nearly 70% the previous week, according to the CME FedWatch tool. This shift in expectations supported gold, a non-yielding asset, as traders anticipated less aggressive monetary tightening [1]. The Federal Reserve is scheduled to announce its next policy decision on Wednesday, with economists expecting the benchmark rate to remain in the 3.50% to 3.75% range as the central bank assesses the economic impact of the recent energy-price shock [1].
From a technical perspective, gold's near-term tone remains bearish, with XAU/USD trading below the Bollinger middle band and well under the 100-day simple moving average (SMA). The Relative Strength Index (RSI) is around 43, indicating lingering downside pressure despite recent stabilization attempts. Key resistance levels are identified at the June 9 high of $4,363 and the Bollinger SMA midline near $4,415, while support lies at the lower Bollinger band around $4,145 [1].
CONCLUSION
The US-Iran peace deal has eased inflation concerns and reduced expectations for further Federal Reserve rate hikes, providing support for gold prices. However, technical indicators suggest that gold's broader recovery remains capped, with downside risks persisting in the near term. Market participants are now focused on the upcoming Fed policy decision for further direction.