International gold prices remained subdued during Tuesday's European session, with spot gold (XAU/USD) trading near $4,550, close to the lowest level seen since March 30. Although tensions in the Middle East have not fully eased, market expectations of a potential agreement between the U.S. and Iran are diminishing gold's appeal as a safe-haven asset.
U.S. President Donald Trump stated on Monday that, at the request of Qatar, Saudi Arabia, and the United Arab Emirates, the U.S. has postponed planned military action against Iran. Trump also emphasized that the U.S. military remains prepared for full-scale military operations if an agreement cannot be reached.
While the market holds some optimism regarding a potential diplomatic agreement, Iran's firm stance continues to keep investors cautious. Responding to Trump's warning that "time is running out," Iranian President Ebrahim Raisi stated that Iran will not yield to any force and emphasized that any negotiations must be based on safeguarding national rights and interests.
Although the situation in the Middle East has not escalated further for now, market risk aversion has notably cooled compared to earlier levels. As concerns over the risk of a full-scale conflict ease, some safe-haven funds that previously flowed into the gold market are returning to U.S. dollar-denominated assets.
Concurrently, expectations of high U.S. interest rates continue to be a significant factor weighing on gold. Recent U.S. inflation data has consistently exceeded market forecasts, and rising energy prices are further fueling concerns about future inflationary pressures.
According to the CME FedWatch Tool, the market has largely ruled out the possibility of a Federal Reserve rate cut within 2026. Conversely, the market now sees a nearly 40% probability of another 25-basis-point rate hike by the Fed before the end of the year. This expectation is driving renewed strength in the U.S. dollar index and keeping U.S. Treasury yields elevated.
The yield on the 30-year U.S. Treasury note remains near its highest levels since 2023, reflecting persistent market concerns about long-term inflation and fiscal deficits. The high-yield environment significantly enhances the attractiveness of U.S. dollar assets and diminishes the appeal of non-yielding assets like gold.
Additionally, the market is awaiting the release of the Federal Reserve meeting minutes on Wednesday for further clues on the future path of interest rates. Until the Fed's policy outlook becomes clearer, investors are maintaining a generally cautious stance towards the gold market.
Market analysts suggest that as long as U.S. yields remain high, gold may continue to face adjustment pressure in the near term.
From a technical perspective, the 1-hour chart for gold continues to show a bearish structure. The price remains below the 100-hour Simple Moving Average (SMA), indicating that the short-term downtrend has not yet reversed. Although a recent bounce from lows briefly improved market sentiment, overall upward momentum has started to weaken. While the MACD indicator remains above the zero line, its momentum value has notably declined to around 3.32, signaling waning bullish strength. Meanwhile, the Relative Strength Index (RSI) is near 51.7, suggesting only limited rebound momentum and no clear uptrend has formed.
The current technical structure shows that the psychological support level of $4,500 has become a crucial zone for the market. If the price effectively breaks below this level and further breaches the overnight low near $4,480, it could open the door for a deeper correction. On the upside, the 100-hour SMA near $4,625 constitutes the current key resistance area. Only a sustained break and hold above $4,625 could alleviate the current bearish pressure and potentially push the market into a phase of recovery.
On the daily chart, gold has entered a clear consolidation phase after its previous rally. The 20-day Exponential Moving Average is beginning to flatten, while the RSI continues to retreat from overbought territory, reflecting a cooling of bullish momentum. Although the MACD still maintains a bullish structure, the narrowing red histogram indicates the uptrend is slowing.
Overall, the gold market is currently in a tug-of-war between "cooling geopolitical safe-haven demand" and "strengthening Fed hawkishness." In the near term, Federal Reserve policy expectations, U.S. Treasury yields, and developments in the Middle East situation will continue to be the primary drivers of gold price movements.
Gold is facing significant macro headwinds. While uncertainty persists in the Middle East, expectations for a diplomatic resolution are eroding its safe-haven demand. Simultaneously, the U.S. environment of high inflation and high interest rates reinforces the advantages of the U.S. dollar and Treasury yields, putting overall pressure on gold. Technically, $4,500 has become a key psychological support zone; a breach could open further downside. However, if the Middle East situation deteriorates again or the Fed signals a more dovish stance, gold could quickly regain support from safe-haven buying. Market volatility is expected to remain elevated going forward.
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