Gold Remains Under Pressure, Recovery Short-Lived
Gold prices weakened after failing to maintain a brief recovery from their lowest level since late March. XAU/USD briefly rose to US$4,590 during the Asian session, but again attracted sellers as the market assessed minimal progress in US-Iran negotiations and the dollar strengthened again.
The diplomatic deadlock was one of the main triggers. Although US President Donald Trump announced he was postponing a planned attack on Iran at the request of Qatar, Saudi Arabia, and the United Arab Emirates, the market remained skeptical as major differences over Iran's nuclear program and the opening of the Strait of Hormuz remained unresolved.
Tehran's response also reinforced the perception of ongoing risk. Iranian President Masoud Pezeshkian rejected pressure from Trump's warning that "time is running out" and asserted that Iran would not bow to any power. Meanwhile, Trump said the US military remained on alert for a full-scale attack if the deal failed, maintaining high geopolitical uncertainty.
However, this time, safe-haven support for gold was not dominant as the market was more focused on the transmission of inflation and interest rates. Bets on the Fed's easing for the remainder of 2026 are said to be "gone," and the market is starting to price in at least one rate hike before the end of the year. CME FedWatch shows a roughly 40% chance of a 25 bps hike at the December meeting.
Rising interest rate expectations have helped keep US bond yields high, including the 30-year yield, which remains near its highest level since 2023. High yields and a strong dollar are typically a combination that pressures gold, as the precious metal offers no yield.
The focus next turns to the release of the FOMC Minutes on Wednesday for clues on interest rate direction, as well as further headlines from the Middle East that could quickly shift sentiment. However, with tight yields and a bid dollar returning, the easier path for gold in the near term remains to the downside.
5 Key Points
- Gold failed to continue its rebound; after rising to the US$4,590 area, it weakened again.
- US-Iran negotiations stalled; the nuclear and Hormuz issues remain a drag.
- Trump's statement about readiness to attack kept geopolitical risks at bay, but it proved insufficient to lift gold.
- Ayu from Newsmaker estimates that, even if tensions ease temporarily, the risk of conflict escalating remains. The situation remains full of uncertainty, and the risk of escalation remains open, potentially triggering further volatility, particularly in oil, the US dollar, and gold. (asd)*
Source: Newsmaker.id
