Gold (XAU/USD) began the week under pressure, trading around $4,500 after reaching a two-week high near $4,595 on Friday, as ongoing US-Iran ceasefire negotiations stalled and fresh Middle East attacks kept buyers cautious [1]. Over the weekend, US Central Command (CENTCOM) conducted 'self-defense strikes' on Iranian radar and drone facilities, while Iran’s Revolutionary Guard retaliated by targeting a US-used air base in response to an attack on southern Iran. Simultaneously, Israel expanded military operations against Hezbollah in Lebanon [1].
Iran’s Foreign Ministry spokesperson Esmaeil Baghaei cited 'lack of trust, constant changes in the US position and Israeli actions in Lebanon' as factors delaying the diplomatic process, though message exchanges between Washington and Tehran are ongoing [1]. Major sticking points in negotiations include Iran’s nuclear program, sanctions relief, and the future status of the Strait of Hormuz [1].
Despite heightened geopolitical tensions, XAU/USD is down more than 15% since the war began and is nearly 20% below its all-time high near $5,600 set in late January [1]. The US Dollar has become the preferred safe-haven asset, diminishing gold’s appeal, while a sharp rise in crude oil prices has added to inflationary pressures and reinforced expectations that central banks, including the Federal Reserve, may keep monetary policy tighter for longer [1].
Markets are currently pricing in a 40% chance of a 25-basis-point rate hike at the December Federal Reserve meeting, according to the CME FedWatch Tool, as resilient US economic data has reduced hopes for near-term rate cuts [1]. Technical analysis shows XAU/USD maintains a bearish bias below the $4,600 resistance level [1]. Looking ahead, traders are awaiting the US Nonfarm Payrolls report on Friday and the ISM Manufacturing PMI data for further clues on the Fed’s interest-rate path [1].
CONCLUSION
Gold remains under pressure due to a strong US Dollar, persistent geopolitical tensions, and expectations of prolonged tight monetary policy. Unless there is a breakthrough in US-Iran negotiations that eases oil prices and inflation concerns, any recovery in gold is likely to face selling pressure. Market participants are closely watching upcoming US economic data for further direction.