During the European session on Wednesday, spot gold edged higher from a near two-week low but remained below the $4,100 threshold, with a negative bias still intact.
While the recent pullback in crude oil prices has alleviated some inflation concerns, market expectations for a Federal Reserve interest rate hike this year have continued to strengthen, pushing the US dollar index to its highest level since May 2025 and exerting persistent pressure on the non-yielding asset, gold.
Concurrently, contradictory statements from the US and Iran regarding nuclear issues are maintaining a geopolitical risk premium and supporting safe-haven demand for the US dollar, leaving short-term downside risks for gold unaddressed.
Oil Price Retreat Eases Inflation, But Rate Hike Expectations Defy Logic
Crude oil prices have fallen significantly over the past month, hitting a new low on Wednesday not seen since early March. The resumption of navigation through the Strait of Hormuz served as a direct catalyst, with reports citing Iranian military sources indicating a limited number of vessels are now allowed daily passage through the strategic waterway following coordination with Iran's Revolutionary Guard Corps Navy.
Simultaneously, the US Treasury Department issued a 60-day temporary sanctions waiver under a broader peace agreement framework, permitting the production, delivery, and sale of Iranian crude oil, petroleum, and petrochemical products.
In theory, lower oil prices help ease upstream inflationary pressures, thereby reducing the necessity for the Federal Reserve to hike rates further, which should be positive for gold.
However, market trading logic has not followed this path. Instead, investors have significantly increased their bets on a Fed rate hike in 2026, anticipating at least a 25-basis-point increase. This seemingly contradictory move stems from recent hawkish signals from Fed officials. In last week's policy decision, nine out of nineteen committee members believed further policy rate increases were necessary to combat inflation. The post-meeting press conference remarks by new Fed Chair Kevin Warsh were particularly noteworthy, focusing heavily on price stability goals and hinting that the Fed would not rush to cut rates even if economic growth slows.
This shift in stance has directly altered market expectations for the policy path.
Conflicting US-Iran Nuclear Signals Sustain Geopolitical Risk Premium for Dollar
Ongoing contradictory statements from the US and Iran on nuclear issues are providing additional safe-haven support for the US dollar. The US Vice President stated on Monday that Swiss-mediated peace talks had led Iran to agree to invite International Atomic Energy Agency (IAEA) inspectors to its nuclear facilities. The former US President further claimed Iran had agreed "completely and unequivocally" to accept the highest level of nuclear inspections for the long term.
However, Iranian state media, citing the foreign ministry, reported that Tehran had made no new commitments regarding nuclear inspections. The starkly opposing narratives mean the reliability of any agreement implementation remains in question.
This information asymmetry directly elevates the geopolitical risk premium, prompting investors to increase holdings of traditional safe-haven assets like the US dollar, thereby indirectly pressuring gold. Although gold itself possesses safe-haven attributes, its disadvantage as a non-yielding asset is magnified in a strong US dollar environment.
Institutional Perspectives
One major bank forecasts that gold will continue setting new record highs in 2026, with an average price of $6,000 per ounce in Q4, potentially reaching $6,300 by the end of 2027. Despite a recent dip in investor interest, robust support comes from central bank purchases, de-dollarization trends, geopolitical safe-haven demand, and long-term currency depreciation trends.
The bank believes that even with a hawkish Fed policy stance, gold's structural floor is solid, anchored around the 200-day moving average near $4,340. Risks include a stronger-than-expected US dollar or economic growth overshooting, but the overall bullish thesis remains unchanged. The view is that investors should add to positions on pullbacks, treating gold as a core component of long-term asset allocation.
The institution emphasizes that while gold is currently in a range-bound phase, its upside potential far outweighs its downside risk, making it the preferred safe-haven and store-of-value asset for the medium to long term.
Another major investment bank maintains a bullish outlook for gold in 2026, with a year-end target around $4,900-$5,400 per ounce, noting a slight upward adjustment in June. The primary drivers are expected to be sustained high levels of central bank buying and reserve diversification, although slowing ETF inflows and delayed Fed rate cuts pose short-term pressures.
This bank expects increased price volatility for gold, unlikely to match the strength seen in 2025, but structural demand should support a moderate uptrend. A stronger US dollar and rising opportunity costs are seen as the main headwinds, with significant upside risks if geopolitical tensions escalate or US data weakens. The suggestion is for investors to watch for potential catalysts in the second half of the year and employ range-trading strategies. The overall stance is neutral-to-optimistic, with gold still suitable as a diversifier within a portfolio, especially in an environment of global uncertainty.
On the daily chart, spot gold maintains a medium-term downtrend with bears in control. The moving average system is exerting downward pressure across the board, with price consistently trading below the short- and medium-term MA20, MA50, and MA100. Only the long-term MA200 at $4,470.22 sits above, forming a strong resistance level. All period moving averages are turning lower, creating heavy resistance to any rebound.
The MACD indicator shows the DIFF line at -108.49, firmly below the DEA line at -99.08, with the bearish green histogram persisting, indicating no significant decay in downward momentum and no low-level golden crossover signal to suggest a bottom. The RSI reading is 33.95, slightly approaching the oversold territory near 30, suggesting only a weak technical correction demand in the short term, insufficient to reverse the overall bearish structure.
In terms of price action, gold has been in a corrective decline since its historical high of $5,596.33, recently testing a low of $4,023.85, breaking below the previous $4,100 support platform. The $4,000 psychological level is now a key downside support. The first resistance above is the MA20 at $4,299.34, followed by the previous consolidation platform around $4,400.
The overall technical picture is bearish for the medium term. Short-term oversold conditions may bring only minor rebounds, with a strategy favoring selling on rallies towards short-term moving average resistance. A decisive break below the $4,023 low would open further downside. Only a sustained move above the MA20 coupled with a low-level MACD golden crossover would signal a potential phase of corrective recovery.
As of the latest update, spot gold was trading at $4,082.40 per ounce.
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