Gold (XAU/USD) traded with a downside bias on Thursday, declining nearly 0.80% to around $4,507, as markets reacted to new developments in US-Iran negotiations and broader macroeconomic factors [1]. According to Reuters, Iran’s Supreme Leader has ordered that near-weapons-grade uranium must remain inside the country, a move that complicates ongoing negotiations with the United States and dampens hopes for a near-term breakthrough to end the Middle East conflict [1]. This stance is significant as limiting Iran’s nuclear program remains a key demand from Washington [1].
Earlier, Iranian media reported that Tehran is reviewing a new draft proposal from the US in response to its 14-point proposal. US President Donald Trump stated on Wednesday that negotiations were in the “final stages,” but warned that military action could resume if no deal is reached [1]. The uncertainty surrounding the conflict has supported safe-haven demand for the US Dollar, with the US Dollar Index (DXY) hovering above the 99.00 mark, its highest in over a month [1].
Elevated oil prices are fueling inflation concerns and reinforcing expectations that the Federal Reserve could raise interest rates by the end of the year [1]. Minutes from the Fed’s April meeting indicated that continued elevated inflation and uncertainty over the Middle East could necessitate maintaining the current policy stance for longer than anticipated. A majority of Fed participants noted that further policy firming may be appropriate if inflation remains persistently above 2% [1].
The hawkish repricing has kept US Treasury yields near multi-month highs, which, along with a stronger US Dollar, are key headwinds for non-yielding assets like gold, limiting its upside momentum [1]. On the technical front, XAU/USD remains below its 50-day and 100-day Simple Moving Averages, maintaining a bearish near-term bias, though it is still above the 200-day SMA near $4,370 [1].
US Initial Jobless Claims came in at 209,000, below expectations of 210,000 and lower than the previous reading of 212,000, while investors await the preliminary S&P Global PMI data for May later on Thursday [1].
CONCLUSION
Gold prices declined as Iran’s uranium policy complicated US-Iran negotiations, boosting the US Dollar and Treasury yields. Persistent inflation and geopolitical uncertainty are supporting expectations for a hawkish Fed stance, keeping pressure on gold in the near term.