Gold Recovers Slightly as Strong Dollar Caps Gains

Key Moments

Macro Drivers and Geopolitics

Gold (XAU/USD) staged a modest rebound after touching its lowest level since November 2025 during the Asian session, but the metal maintained a negative tone for the second straight day on Tuesday. The move unfolded against a backdrop of renewed tensions in the Middle East and mixed signals over US-Iran negotiations, which helped the US Dollar attract dip buyers and pause its recent retreat from the strongest level since May 2025. Firm expectations for further Federal Reserve interest rate hikes added to Dollar support and continued to pressure bullion.

Media reports indicated that the US and Iran had agreed to “stand down” following an exchange of strikes in and around the Strait of Hormuz in recent days, with both sides accusing the other of breaching a ceasefire agreement. At the same time, US President Donald Trump wrote on Truth Social that Iran had requested a meeting and that it would take place in Doha, the capital of Qatar, on Tuesday. In contrast, Deputy Iranian Foreign Minister Kazem Gharibabadi stated that there were no plans for technical talks this week. This uncertainty preserved geopolitical risk premiums and underpinned safe-haven demand for the US Dollar.

Fed Expectations, Inflation Fears, and Safe-Haven Flows

The latest flare-up in US-Iran tensions also rekindled inflation concerns. Combined with the Federal Reserve’s more hawkish stance, this supported expectations for additional rate hikes. According to the CME Group’s FedWatch Tool, market participants continued to price in roughly a 63% probability of a rate increase by the US central bank in September and more than an 80% chance of a move by year-end. This policy outlook reinforced the bid for the Dollar and diverted flows away from non-yielding assets such as gold, which appeared to have established acceptance below the $4,000 psychological threshold.

Further pressure on precious metals came from currency markets, where the Japanese Yen (JPY) dropped to a new four-decade low versus the US Dollar. The Yen’s sharp weakness added to the headwinds facing the broader precious metals complex.

Upcoming Data and Fed Communication in Focus

Traders looked ahead to Tuesday’s US economic releases, including the Conference Board’s Consumer Confidence Index and JOLTS Job Openings, for additional near-term catalysts. However, greater attention was directed toward Fed Chair Kevin Warsh’s appearance on Thursday at the European Central Bank (ECB) Forum in Sintra. In addition, the upcoming Nonfarm Payrolls (NFP) report was expected to provide further insight into the Fed’s policy path, shaping Dollar dynamics and, in turn, influencing the trajectory of gold prices.

Technical Picture: Gold Still Vulnerable Below $4,000

On the 4-hour chart, multiple recent failures near the 100-period Simple Moving Average (SMA) have reinforced resistance overhead, and the market’s acceptance below $4,000 is seen as a fresh signal favoring XAU/USD bears. The Moving Average Convergence Divergence (MACD) indicator remains just below the zero line with a slightly negative reading, pointing to fading downside momentum rather than a decisive bullish turn.

At the same time, the Relative Strength Index (RSI) is hovering around 34, close to oversold territory. This suggests that selling pressure may be losing intensity, but it does not yet confirm a sustained reversal higher.

Any more substantial rebound above $4,000 is likely to encounter immediate resistance near $4,045. A move through that zone could allow the metal to challenge the $4,100 handle. Further gains might draw renewed selling interest and are expected to remain constrained around the 100-period SMA at $4,180.34. Only a sustained break above this barrier would significantly diminish the current bearish stance and open the way for a more constructive recovery phase.