Gold Slumps as Inflation Fears Eclipse Safe-Haven Appeal

Key Moments

Geopolitical Tensions Fail to Sustain Gold Rally

Gold prices slipped to 4,300 USD per ounce on Tuesday, with the market struggling to find support even as conflict in the Middle East intensified. Iran rejected reports of any negotiations with the United States, emphasizing that no such contacts had taken place.

Tehran dismissed statements by Donald Trump as an effort to move financial markets and has continued targeting American assets. At the same time, Israel is persisting with strikes on Iranian territory.

Gold briefly recovered earlier after Trump delayed possible attacks on Iran’s energy facilities and claimed that talks had begun. However, the outlook for de-escalation and for reopening the Strait of Hormuz remains unclear, keeping inflation risks in focus.

Inflation Concerns and Policy Expectations Pressure Gold

From its March high, gold has declined by as much as 25%, coinciding with an upswing in energy prices. The broader advance in commodities has strengthened expectations that monetary policy could become more restrictive, which has been negative for gold as a non-yielding asset.

As markets refocus on the potential for higher rates and persistent inflation pressures linked to the Middle East conflict, safe-haven interest in gold has repeatedly been overshadowed by concerns about tighter financial conditions.

Technical Picture: Consolidation with Bearish Bias

On the H4 XAU/USD chart, price action is consolidating around 4,383 USD. A break to the upside from this range could set the stage for a corrective move toward 4,850 USD. Conversely, a break to the downside would likely extend the prevailing decline toward 4,272 USD. The MACD indicator corroborates the current structure, with its signal line positioned below the center line but turning sharply higher.

On the H1 timeframe, the market has already pushed through the 4,300 USD level and completed a move to 4,414 USD. From here, a pullback toward 4,308 USD is viewed as probable, after which a new advance toward 4,505 USD is anticipated. The Stochastic oscillator backs this outlook, with its signal line holding above 20 and showing room to rise toward 80.

Outlook: Short-Term Bounce Within a Dominant Downtrend

Gold continues to fall out of favor as investors concentrate on inflation risks stemming from the prolonged conflict in the Middle East. Headlines suggesting possible negotiations have offered only fleeting support, while ongoing hostilities and uncertainty around the Strait of Hormuz sustain elevated energy prices and reinforce expectations of tighter monetary policy.

After shedding around a quarter of its value from March highs, gold is navigating a challenging backdrop in which the prospect of rising rates repeatedly dampens its safe-haven appeal. Although technical indicators point to the likelihood of a short-lived rebound, the overarching direction of travel for prices remains firmly to the downside.

By RoboForex Analytical Department

Disclaimer:
Any forecasts contained herein are based on the author’s particular opinion. This analysis may not be treated as trading advice. RoboForex bears no responsibility for trading results based on trading recommendations and reviews contained herein.