Gold Rebounds Above $4,030 as Dollar Rally Pauses

Key Moments

Gold Recovers as Dollar Rally Slows

Gold attracted fresh buying interest during Tuesday’s Asian session. The metal recovered from a near two-week low and moved back above $4,030 before European trading began.

Meanwhile, the U.S. Dollar (USD) paused after a strong two-day advance. Dollar buyers turned cautious ahead of U.S. inflation data and Federal Reserve (Fed) Chair Kevin Warsh’s testimony. As a result, gold recovered some of Monday’s losses.

However, traders remained careful about chasing further gains. Rising U.S.-Iran tensions and expectations for more Fed rate hikes continued to support the Dollar. Therefore, these factors could limit gold’s recovery.

Markets Await U.S. CPI and Fed Testimony

The U.S. Consumer Price Index (CPI) report was due later on Tuesday. Economists expected headline inflation to fall, mainly due to lower gasoline prices in June. However, markets focused more on core CPI because it shows underlying inflation trends.

Additionally, investors watched Fed Chair Kevin Warsh’s first semi-annual monetary policy testimony before the House Financial Services Committee. His comments could offer clues about future interest rate decisions.

As a result, these events could drive short-term moves in the Dollar and gold. The precious metal does not pay interest and often reacts to changes in U.S. rate expectations.

Geopolitical Risks Support Dollar Demand

Meanwhile, Middle East tensions added fresh uncertainty to markets. The closure of the Strait of Hormuz and rising U.S.-Iran tensions pushed crude oil prices to a near one-month high. This move revived inflation concerns and increased expectations for higher-for-longer U.S. rates.

According to the report, the U.S. military launched a third straight night of strikes against Iran on Monday. The move followed President Donald Trump’s decision to reintroduce a naval blockade on Iranian ports. Iran responded by targeting U.S. facilities in the region, while two UAE tankers faced attacks in the Strait of Hormuz.

Market participants quickly priced in higher geopolitical risks. Consequently, the Dollar gained support. Although these risks usually benefit safe-haven assets, current conditions have favored the greenback more than gold.

Gold Outlook: Recovery Faces Fresh Pressure

Gold’s broader outlook remains uncertain as traders balance monetary policy expectations with geopolitical risks. However, the latest rebound could face selling pressure if the Dollar regains strength.

Therefore, XAU/USD remains vulnerable to another decline. A move toward the year-to-date low near the $3,943-$3,942 area remains possible after the June 30 low.

Technical View: Bearish Trend Remains Intact

From a technical perspective, gold continues to trade below its 200-day Simple Moving Average (SMA). The metal also remains inside a descending channel, keeping the broader bearish trend intact.

Meanwhile, the Moving Average Convergence Divergence (MACD) indicator has turned slightly positive. This suggests bearish momentum may be slowing, but it does not confirm a full trend reversal.

The Relative Strength Index (RSI) is also near 39, below the neutral 50 level. Therefore, the current rebound appears fragile rather than a strong bullish reversal.

On the upside, gold may face resistance near $4,100. A clear break above this level could trigger short-covering and push prices toward the upper channel boundary around $4,221. Moreover, further gains could bring the 200-day SMA near $4,495.01 into focus. A move above this level would weaken the bearish outlook.

On the downside, gold has support near $3,761.01 at the lower edge of the parallel channel. A decisive break below this area could open the door to a deeper decline.