Gold prices exhibited cautious consolidation during Friday's Asian trading session, with spot gold (XAU/USD) hovering around $4,530. The market is currently assessing developments in US-Iran ceasefire negotiations and potential policy shifts following the change in Federal Reserve leadership, leading to a temporary stalemate between gold bulls and bears.
The primary driver for recent gold gains remains global safe-haven demand stemming from escalating Middle East tensions. Iranian officials indicated that the latest US proposal has narrowed some differences, but the situation remains complex. Iran's top leadership emphasized that Tehran will not relinquish its uranium reserves, while the issue of tolls for the Strait of Hormuz continues to be a major point of contention. Market participants view this as a sign that, despite some easing in tensions, significant obstacles remain before a comprehensive agreement can be reached. Former US President Donald Trump previously warned that the US could swiftly resume military action if Iran does not accept American conditions. Such hawkish rhetoric has limited further improvement in market risk sentiment, continuing to support gold's safe-haven appeal. The Strait of Hormuz handles approximately 20% of global seaborne crude oil shipments. Consequently, any changes concerning control of the region or shipping security can rapidly impact global energy markets and financial risk appetite. The market's primary concern is that a renewed deterioration in the situation could trigger another sharp rise in international energy prices, thereby exacerbating global inflationary pressures. However, for gold, the impact of rising energy prices is not entirely positive. Kiran Kaushik, a global FX strategist at Lombard Odier, noted that gold, as a non-yielding asset, typically performs best in an environment of declining US real yields and a weaker US dollar. Yet, if energy supply shocks prompt the market to reprice expectations for higher interest rates, it could lead to simultaneous strength in US Treasury yields and the dollar, thereby suppressing gold's performance. The gold market is currently navigating a dual dynamic between "safe-haven demand" and "high interest rate pressure." On one hand, uncertainty in the Middle East continues to attract some safe-haven flows into gold. On the other, rising energy prices could push US inflation higher, potentially weakening market expectations for future Fed rate cuts. Furthermore, the change in Federal Reserve leadership has also become a key market focus. Former US President Donald Trump is set to formally appoint Kevin Warsh to succeed Jerome Powell as Fed Chair. The market widely perceives Kevin Warsh's overall stance as leaning hawkish, with a particular focus on inflation control. As Powell will temporarily continue in his role until the formal handover is complete following the end of his term, Kevin Warsh is expected to chair his first Federal Open Market Committee (FOMC) meeting in June. There is market concern that the new Chair may further reinforce the Fed's commitment to combating inflation. Recent Fed meeting minutes have shown that most officials are concerned about the inflationary risks posed by rising energy prices and believe that if core inflation persists above target levels, the Fed would not rule out reconsidering interest rate hikes. Against this backdrop, US Treasury yields remain elevated overall, and the US dollar index maintains a strong trajectory, which has somewhat constrained gold's potential for further gains. From a market sentiment perspective, the gold market is currently in a phase of high-level consolidation. Earlier, international gold prices surged significantly due to escalating Middle East conflicts. However, as the market began reassessing the Fed's policy path, some funds opted to take profits at these higher levels. From a technical analysis perspective, gold's daily chart continues to maintain a medium-to-long-term uptrend overall, but the short-term picture shows a consolidation phase. The price is currently trading stably above key moving averages, indicating that the medium-to-long-term bullish structure remains intact. Although the daily MACD indicator remains at high levels, the diminishing red histogram suggests some slowing in upward momentum. Meanwhile, the RSI indicator has retreated from overbought territory, indicating a need for short-term consolidation and correction. Key support levels below are located around $4,500 and $4,460, while resistance above is concentrated around the $4,580 and $4,600 psychological levels. A decisive break above $4,600 could reopen the path for further gains. The 4-hour chart shows gold's short-term movement has entered a range-bound consolidation structure. The moving average system is gradually flattening, suggesting a temporary weakening in directional bias. If US-Iran tensions ease further and the Fed signals a more hawkish stance, gold could face increased downside pressure. Conversely, if Middle East tensions worsen again, safe-haven demand could swiftly propel prices higher. The core logic of the current gold market has gradually shifted from pure safe-haven trading to a complex interplay between "geopolitical risk" and "interest rate expectations." The Middle East situation remains complicated, with the Strait of Hormuz issue and US-Iran disagreements unresolved, providing ongoing support for gold's safe-haven role. However, rising energy prices could elevate global inflation, and with the new Fed Chair taking office, market concerns about prolonged high interest rates have notably increased. This imposes some constraints on gold's upside potential. Future market focus will center on US-Iran negotiation progress, the Fed's June meeting, and changes in US inflation data. If global risk aversion intensifies again, gold could still reach new highs. However, if the Fed reinforces its hawkish stance, prices may remain in a high-level consolidation phase or even undergo a technical correction in the short term.
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