Gold (XAU/USD) rose nearly 1% to around $4,530 on Tuesday, remaining within a two-week range as traders responded to rapidly evolving headlines from the Middle East and comments from US President Donald Trump. Trump stated that US-Iran negotiations are continuing 'at a rapid pace,' despite reports from Iran that talks have been suspended. Trump also expressed optimism about reaching an agreement within the next week to extend the ceasefire and reopen the Strait of Hormuz, while Lebanon’s Embassy in the US announced that Hezbollah accepted a US-backed proposal for a 'mutual cessation of attacks.' Following these developments, Israel reportedly called off a planned operation against Hezbollah in Beirut, and Hezbollah agreed not to attack Israel. These events improved market sentiment, causing the US Dollar and crude oil prices to decline slightly, which supported gold’s recovery from below $4,500 [1].
Despite the short-term uptick, gold’s upside momentum remains subdued due to persistent inflation concerns linked to higher energy prices, which have stalled the Federal Reserve’s disinflation progress and increased the likelihood of prolonged higher interest rates. US inflation has accelerated sharply since the US-Iran war began in late February, moving further from the Fed’s 2% target. Market expectations have shifted from anticipating at least two rate cuts this year to now pricing in the possibility of a rate hike before year-end, according to the CME FedWatch tool. Technical analysis shows XAU/USD holding above the 200-day SMA at $4,416, but with a bearish near-term bias as it remains below the 50-day and 100-day SMAs. The RSI at 45 and a marginally negative MACD indicate subdued upside momentum [1].
TD Securities strategists have downgraded their gold price forecasts for the next two quarters, citing higher inflation expectations from supply shocks, which have pushed yields higher and kept the US Dollar firm. They see downside risk toward $4,000–4,200/oz if oil prices surge, but have materially upgraded their long-term projections, targeting an average of $5,350/oz by Q2 2027. They expect that after the Iran war concludes, easing inflation pressures will allow interest rates to move lower and the dollar to weaken, potentially driving gold above their long-term target. Factors such as fear of financial repression, elevated geopolitical risks, and increased investor and central bank buying are also cited as supportive for gold in the longer term [2].
Silver (XAG/USD) also gained, trading 1.85% higher near $76.30 during the European session on Tuesday. The rise in silver was attributed to a correction in oil prices and ongoing uncertainty over a US-Iran peace deal. WTI oil prices fell 1.8% to near $89.20 after Trump’s comments, which signaled he had influenced Israel to halt attacks on Iran-backed Hezbollah in Lebanon. However, uncertainty remains high, as Iran’s Tasnim News agency reported that Tehran’s negotiating team has stopped exchanging messages with the US through mediators in response to escalations in Lebanon. The inverse relationship between oil and silver prices has persisted since the Middle East war began, with higher energy prices fueling US inflation and reducing the likelihood of Fed rate cuts this year [3].
Looking ahead, markets are focused on upcoming US labor market data, including the JOLTS Job Openings report, ADP Employment Change, and the Nonfarm Payrolls (NFP) report, as investors seek further cues on the Fed’s monetary policy outlook [1][3].
CONCLUSION
Gold and silver prices have risen amid ongoing uncertainty over US-Iran negotiations and shifting expectations for Federal Reserve policy. While short-term risks for gold remain due to inflation and firm yields, long-term projections have been upgraded on expectations of easing inflation and geopolitical risks. Market participants are closely watching upcoming US labor data for further direction.