Gold contracts have stalled despite yesterday’s attempt to break above the local peak near $4,770 per ounce. The minimal volatility in the commodity—a primary driver of gains throughout 2025—indicates stagnant sentiment in the face of a fragile Middle East ceasefire and uncertainty regarding the future of U.S. monetary policy.
After forming an inverted hammer pattern yesterday, GOLD has flattened out at the $4,720–$4,730 level. The RSI remains neutral, sitting slightly below 50, highlighting a distinct lack of direction in what has been one of the most volatile markets in recent months. These same concerns are shaping 10-year U.S. Treasury notes (TNOTE, blue), which are “holding their breath” ahead of today’s PCE inflation reading. Source: xStation5
What is driving GOLD prices today?
- A fragile ceasefire: A member of the Iranian parliament accused the U.S. today of violating the two-week-old ceasefire. In his statement, Mohammad Ghalibaf emphasized a deep mistrust of the U.S., citing continued Israeli strikes on Lebanon, drones violating Iranian airspace and the refusal to recognize Iran’s right to continue enriching uranium. While Washington distances itself from the Lebanon issue, these tensions are resulting in the continued blockade of the Strait of Hormuz.
- A spectrum of risks and lack of direction in Fed minutes: Although some investors dismissed yesterday’s FOMC minutes as “outdated,” they largely explain the lack of consensus regarding the interest rate path—and consequently, the relative attractiveness of gold compared to interest-bearing bonds. Following the energy price shock, the debate over potential hikes has returned to the Fed. However, this hawkishness is tempered by fears of a sudden labor market collapse should a supply shock persist. The rising probability of stagflation (high prices driven by oil combined with layoffs to cut costs) poses a risk to both sides of the Fed’s mandate, leaving monetary policy caught between a rock and a hard place.
- Market indecision on the core scenario: While the prospect of aggressive U.S. rate hikes has cooled, it has been replaced by a state of suspension. The swap market is currently pricing in only a 25% chance of a single rate cut by the end of 2026 (by comparison, the FOMC’s Michelle Bowman recently advocated for three). Ultimately, inflation prospects are currently at the mercy of the Middle East conflict; further fluctuations in sentiment will only make it more difficult to read markets like GOLD or TNOTE.
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