FX.co ★ XAU/USD, GOLD

During Monday's early Asian session, the gold price (XAU/USD) is trading with little loss at $4,155. Traders are still evaluating the developments surrounding the US-Iran peace negotiations in Switzerland. However, the US Federal Reserve's (Fed) hawkish signals may limit the precious metals' short-term growth. Over the weekend, US President Donald Trump raised concerns about the advancement of peace negotiations between Washington and Tehran by threatening to bomb Iran if Hezbollah continues to assault Israel. In response to Trump's vocal threats to strike Iran again, Iranian negotiators halted high-stakes talks with the US in Switzerland; nevertheless, those familiar with the situation indicated the conversations were still ongoing. Because Goldman Sachs no longer anticipates the US rate decrease this year, the firm projects that gold prices will increase to $4,900 per ounce by December, down from its previous estimate of $5,400. This week's price action is quietly astonishing, as gold is the asset of choice when the world appears perilous. Despite the ongoing Middle East conflict and an unwritten truce that has heightened geopolitical risk, bullion closed the week down approximately 1.5%, marking its sixth consecutive week of negative or flat closing. Instead, the metal, which is supposed to flourish in this exact setting, is moving closer to the $4,000 handle, far from the February record of $5,600. The rationale is nearly entirely related to the Federal Reserve (Fed) and has very little to do with fear. Gold has been trading as a pure inverse of US real yields for the past six weeks despite all the geopolitical worries. Despite holding at 3.75% in June, the Federal Open Market Committee (FOMC) raised its dot plot. The markets are now leaning toward a 2026 increase rather than the cuts they predicted last year, and the median prediction now carries a rising bias. After reaching a lower support level around $4,000 last week, gold (XAUUSD) recovered on Monday. Due to the strength of the US dollar and US Treasury yields, gold and silver (XAGUSD) prices are still in a short-term bearish trend despite this rally. Last week, the U.S. Dollar Index broke over the crucial barrier of 100.50 and consolidated above it in anticipation of more gains. The U.S. Dollar Index's immediate resistance level is still 102. This suggests that there may be more short-term pressure on the price of gold and silver. A good price action is indicated when the US dollar index forms a double bottom pattern and subsequently breaks above 100.50. The U.S. Treasury yield, on the other hand, continues to rise and stabilizes at 4.45% above the 50-day SMA. U.S. Treasury yields will probably rise to 4.70% if the support level is maintained. In the short run, this might keep the price of gold and silver under pressure. The hawkish Fed is to blame for the strength of the US dollar and US Treasury yields. Because of the increase in inflation figures, traders are pricing in tighter monetary policy. Technically speaking, the spot gold has been holding steady within the $4,000–$5,000 wedge pattern. However, a break below $4,500 has opened the door for further decline in the gold price and keeps the market within the bearish trend. At the lower end of this wedge, at $4,000, the prices are already rising. The wedge support line at $3,950 continues to be the next level of support in the spot gold market. Further declines in the spot gold market will be possible if it breaks below $3,950. A break above $4,500, however, will signal additional gains in the direction of $5,000. Another graphic that illustrates how the price is compressing near the triangle's edge also highlights the significance of the $4,000 mark. As a result, a break below $3,950 might signal a significant decline. The spot gold 4-hour chart likewise displays negative price movement below the red highlight at $4,350. The spot gold market has been under bearish pressure due to an inability to break over $4,350. As a result, a break below $4,000 will allow for additional short-term declines.