Spot gold traded in a weak, range-bound manner during the Asian session on Wednesday, hovering around the $4,500 per ounce level. Escalating tensions in the Middle East have fueled demand for the US dollar as a safe-haven asset. Concurrently, rising international oil prices have heightened global inflation concerns, leading markets to anticipate that major central banks may maintain higher interest rates for longer, thereby capping gold's potential rebound. Investors are awaiting the upcoming US PCE inflation data and the latest commentary from Federal Reserve officials.
Simultaneously, Iran's Revolutionary Guards stated that they reserve the right to carry out a "legal and definitive" retaliation for any US violations of the ceasefire. Iran's Supreme Leader, Mojtaba Khamenei, added that regional countries would no longer be a "safe zone" for US military bases. These remarks have significantly intensified market concerns about a further deterioration in Middle East tensions, driving continued safe-haven flows into the US dollar. The Strait of Hormuz handles approximately 20% of global seaborne crude oil shipments. Uncertainty regarding the security of transport through this critical chokepoint has raised fears of potential disruptions to global energy supplies, supporting elevated international oil prices. Furthermore, the US blockade of an Iranian port has reinforced market expectations of tighter crude supply. The rise in oil prices has reignited concerns that "energy-driven inflation" could resurface. The prevailing market narrative is shifting. While geopolitical risks traditionally benefited gold, the current focus is on how high oil prices might compel major global central banks to sustain restrictive monetary policies. Market pricing now suggests a nearly 50% probability of a Federal Reserve rate hike before December. Meanwhile, the Reserve Bank of Australia already raised rates in May, and markets expect the European Central Bank, Bank of Japan, and Reserve Bank of New Zealand to further tighten policy within the year. As gold offers no yield, a high-interest-rate environment typically diminishes its appeal. Concurrently, elevated US Treasury yields and a strong US Dollar Index are further constraining gold's upside. The market is also awaiting further commentary from Federal Reserve officials to gauge the future policy path. With no major US economic data scheduled for release on Wednesday, the dollar's short-term movements are primarily influenced by Fed rhetoric and developments in the Middle East. However, the market's primary focus remains on Thursday's release of the US Personal Consumption Expenditures (PCE) Price Index and the revised US GDP figures. The PCE data is one of the Fed's preferred core inflation gauges. Should the data indicate persistent US inflation, expectations for the Fed maintaining higher rates could intensify, continuing to pressure gold. Conversely, a significant cooling in inflation data could alleviate upward pressure on the dollar and help gold find short-term stability. From a technical perspective, gold's 4-hour chart maintains an overall weak structure. After encountering resistance near $4,580, short-term corrective pressure has increased noticeably. The $4,580 zone now coincides with the 100-period Exponential Moving Average, forming a key technical resistance level. The MACD indicator continues to operate below the zero line, suggesting bearish momentum remains dominant. Meanwhile, the RSI indicator hovers around 41, below the neutral zone, indicating a short-term bearish bias in market sentiment. A break below the monthly low support at $4,450 could open the door for further declines, implying ongoing adjustment risks for gold. On the daily chart, while gold's medium-to-long-term trend remains elevated, it has clearly entered a corrective phase in the short term. The MACD's red momentum bars are contracting, and the RSI has retreated significantly from overbought territory, reflecting increasing profit-taking pressure. Key resistance levels above are seen at $4,580 and $4,620; important support levels lie near $4,450 and $4,380. The 4-hour chart shows that gold's short-term bearish structure has not changed significantly. The price continues to trade below its short-term moving averages, with the MACD in negative territory, indicating a prevailing short-term bearish bias. If the dollar continues to be supported by safe-haven demand and high-rate expectations, gold may test the $4,450 support further. However, should the US PCE data show cooling or signs of de-escalation emerge in the Middle East, gold prices could stage a technical rebound. The market's current focus is on the US PCE data, Federal Reserve officials' remarks, and the evolution of the Middle East situation. Markets are also closely monitoring international oil price movements, as changes in energy prices will directly impact future global inflation expectations and the policy paths of major central banks.
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