- High-level negotiations between the US and Iran concluded their first round in Switzerland, with both parties agreeing to draft a roadmap and reach a final agreement within 60 days. This move alleviated market concerns about the security of the Strait of Hormuz and potential disruptions in energy supply, leading to a drop of over 1% in Brent crude oil futures and indirectly weakening the demand for gold as an inflation-hedging asset.
- Spot gold prices rebounded by 0.7% to $4,189.69 per ounce after hitting a multi-day low, but the overall momentum of the rebound was severely suppressed by hawkish signals from the Federal Reserve (Fed).
- The Fed's dot plot indicates the possibility of further rate hikes this year, with the market currently pricing in 41 basis points of tightening by the end of the year. Fed Chairman Kevin Warsh emphasized inflation risks and former President Trump's tacit approval on social media, jointly reinforcing market expectations of tightening, resulting in strong real interest rates and a robust dollar index.
Easing Geopolitical Tensions Suppress Inflation Expectations
The first round of high-level US-Iran talks in Switzerland sent positive signals. According to a joint statement released by mediators Qatar and Pakistan, both parties have agreed to draft a roadmap aimed at reaching a final agreement within 60 days. This diplomatic progress directly reduced the risk of the Strait of Hormuz energy corridor being blocked, causing Brent crude oil futures to drop by over 1%. Since high oil prices typically exacerbate global inflation concerns and raise central bank rate hike expectations, the decline in energy prices fundamentally weakened gold's value as an inflation hedge. Although spot gold briefly rebounded to around $4,189.69 per ounce, analysts from Marex and other institutions pointed out that geopolitical situations are extremely unstable, and short-term trading around geopolitical factors is mostly volatile, making it difficult to conceal the overall pressure on gold due to weakening commodities.
Fed's Hawkish Dot Plot Reshapes Rate Path
Aside from geopolitical factors, the Fed's policy shift is the core driving force suppressing bullish sentiment for gold. Last week, the Fed unexpectedly released hawkish signals, with 9 out of 19 policymakers believing a rate hike is needed this year. Financial markets have now readjusted pricing, factoring in 41 basis points of tightening by the end of the year. The probability of a rate hike in July has risen to 36%, while in September it has reached 74%. Fed Chairman Kevin Warsh emphasized inflation risks and noted that financial markets are an important source of information guiding central bank decisions. Since gold is a non-interest-bearing asset, its opportunity cost significantly increases in a macroeconomic environment where central bank tightening drives up real interest rates and strengthens the dollar. If subsequent core inflation and other economic data perform strongly, the pressure for a gold valuation correction will be further released.
Technical Resonance Shows Downward Pressure
From a technical analysis perspective, gold's movement is trapped in a technical stalemate across multiple cycles, with an overall bearish bias. On the daily chart, gold prices have once again fallen below the previous upward trend line, with the overall structure turning bearish, and the mid-term target pointing to around $3,885. On the 4-hour chart, there is a strong resistance zone around $4,250, which forms a technical resonance with the previously broken trend line. It is expected that bears will continue to exert pressure near this area, using the area above the trend line as a clear risk control point. On the 1-hour short-term chart, although the current price is supported by a short-term upward trend line, if it fails to effectively break through the $4,250 resonance resistance zone, the short-term rebound will struggle to evolve into a trend-based rise. Once gold prices break below the short-term support line, downward momentum is expected to further strengthen.
