Spot gold (XAU/USD) maintained a modest upward trajectory during Tuesday's Asian trading session, extending the rebound from the previous day's close. Following the announcement of a comprehensive framework agreement between the United States and Iran to end their prolonged military conflict, market concerns over energy supply disruptions and persistent global inflation have notably eased. This has prompted a gradual repositioning of safe-haven capital flows. With oil prices retreating, the US dollar weakening, and US Treasury yields declining, gold has regained some support as a traditional safe-haven asset.
The US President and Vice President have signed an electronic version of a memorandum of understanding with Iranian officials. The US President stated that the Strait of Hormuz has been partially reopened and is expected to achieve full navigation by this Friday. However, some uncertainty remains regarding the details of the agreement. Iran plans to impose certain transit fees on this critical waterway, while the US has stated that the strait will resume normal operations without additional charges. Simultaneously, the US President warned that if Iran fails to finalize a nuclear agreement with the US, military actions could resume. This keeps market caution regarding the long-term stability of the Middle East situation.
Market analysts believe the gold market is gradually digesting the safe-haven premium that was previously driven by the conflict. As news of the peace agreement alleviates risks of rising energy prices, the most significant market fear—inflationary pressure—has lessened. This has led to a concurrent decline in US Treasury yields, the US dollar index, and international oil prices. The short-term drivers for the gold market have shifted from geopolitical risks to expectations surrounding the Federal Reserve's monetary policy and upcoming US economic data.
Concurrently, a cooling in expectations for Federal Reserve interest rate hikes is also providing support for the non-yielding asset, gold. According to the CME FedWatch Tool, traders' probability for a Fed rate hike in December has dropped from nearly 70% last week to approximately 58%. The market widely anticipates that the Fed will maintain the federal funds rate within the 3.50% to 3.75% range in its upcoming rate decision. This pause is intended to allow for further observation of the sustained impact of the previous energy price shock on the economy and inflation.
Although gold has found a window for a short-term rebound, from a broader market structure perspective, bulls still face significant technical pressure. The gains previously driven by safe-haven sentiment are being gradually absorbed by the market. Investors are focusing on the Fed's policy statement and the Chair's remarks for more clues on the future interest rate path and US dollar direction. These factors will determine whether gold can break free from its current weak consolidation pattern.
Technical Analysis: Daily Chart
From a daily chart perspective, spot gold remains in a weak corrective structure overall, with prices consistently trading below the middle Bollinger Band and the 100-day moving average. This indicates that a medium-to-long-term uptrend has not yet been re-established. The Relative Strength Index (RSI) is currently around 43, below the neutral 50 level, suggesting that downward momentum has not fully dissipated. Initial resistance is noted near $4360. A decisive break above this level could see prices challenge the middle Bollinger Band area around $4400, followed by a stronger resistance zone between $4680 and $4760. Key support lies near $4150. A break below this area could reopen the path for a decline towards previous lows.
Technical Analysis: 4-Hour Chart
On the 4-hour chart, gold has shown a technical correction following a recent rapid decline, but the rebound momentum remains limited. Prices have yet to break above key moving average resistance, indicating the short-term trend is primarily weak with consolidation. Technical indicators show that bearish momentum has moderated, but bulls have not yet formed a clear trend reversal signal. If prices can stabilize above $4360, the short-term rebound space could expand. Conversely, if prices are rejected and fall below the $4145 support level, a new round of corrective movement may emerge.
Market Outlook Summary
The US-Iran peace framework agreement has reduced market concerns over energy supply disruptions and persistently high inflation, driving down oil prices and the US dollar, which in turn has provided a temporary rebound opportunity for gold. However, as disagreements on key terms between the two sides are not fully resolved, the risk of volatility in the Middle East situation persists. Furthermore, the future path of Federal Reserve policy remains the core variable determining gold's medium-to-long-term trajectory. In the near term, gold may maintain a consolidating and corrective pattern. However, until key technical resistance areas are decisively breached, the overall weak structure has not completely changed. Investors should closely monitor the impact of the upcoming Fed rate decision, policy guidance, and subsequent US economic data.
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