Gold Holds Near $4,328 as Iran Diplomacy Offsets Hawkish Fed

Gold steadied near $4,328 after rebounding from an intraday low of $4,291. The recovery followed Iran’s proposal to reopen the Strait of Hormuz within seven days. This diplomatic move reduced immediate geopolitical risk for energy markets. Traders responded by trimming dollar positions, which supported precious metal prices. However, the upside remained limited by persistent macroeconomic headwinds.

Hawkish Federal Reserve expectations continue to cap the metal’s potential gains. The central bank raised rates to 3.75%-4.00% last week to combat inflation. Sixteen of eighteen officials expect at least one more increase this year. This tightening stance creates a challenging environment for non-yielding assets. Higher borrowing costs typically reduce the appeal of holding gold.

Iran Proposal Affects Dollar and Oil

Iran offered to lift the blockade on its ports if the US eases pressure. This development caused the US Dollar Index to trim earlier gains. The index traded around 100.60, slightly below its intraday high of 100.67. West Texas Intermediate oil prices also fell for a fifth straight day. WTI crude trades near $90, down more than 5% this week. These shifts indicate a temporary easing of supply-side tensions.

President Donald Trump stated the US could reach a deal after midterms. This comment added uncertainty to the timeline for resolution. Markets are monitoring how these diplomatic efforts impact inflation expectations. A sustained drop in oil prices could reduce pressure on the Fed. This would potentially allow for a stronger recovery in gold prices.

Fed Tightening Limits Gold Recovery

The Federal Reserve’s first rate hike since 2023 has reshaped market expectations. ING analysts noted that investors are assessing the implications of further tightening. Comments from officials reinforced concerns that inflation remains elevated. This supports the view that rates will stay higher for longer. Tighter monetary policy remains a significant headwind for bullion.

Despite the headwinds, ETF holdings are at a six-month high. Central bank buying continues to provide a floor for prices. These institutional flows help limit downside potential during periods of volatility. The balance between diplomatic hopes and monetary policy defines the current market range. Traders await clearer signals on the pace of future rate decisions.

Technical Range Defines Near-Term Bias

Gold trades above the 50-day and 100-day simple moving averages. These levels sit at $4,301 and $4,316, respectively. The price remains below the 200-day moving average at $4,541. This setup keeps the near-term bias broadly neutral. The metal is caught between support and longer-term resistance.

The Relative Strength Index stands at 47, close to the neutral mark. The Moving Average Convergence Divergence remains in negative territory. However, fading histogram bars suggest bearish momentum is losing strength. A break below $4,301 could expose the $4,150 level. Conversely, a sustained rise above $4,541 would strengthen the bullish outlook.