Gold recovers slightly from YTD low; not out of the woods yet amid bullish USD

• Gold attracts heavy selling pressure for the second straight day amid a broadly firmer USD.
• The US-Iran uncertainty revives inflation fears and bolsters Fed hike bets, boosting the buck.
• Traders look to the US data for some impetus ahead of Fed Chair Warsh and the US NFP.

Gold (XAU/USD) recovers slightly from its lowest level since November 2025, touched during the Asian session, albeit it sticks to a negative bias for the second straight day on Tuesday. Against the backdrop of renewed Mideast tensions, mixed signals on US-Iran talks assist the US Dollar (USD) to attract some dip-buyers and stall its recent pullback from the highest level since May 2025. Apart from this, elevated expectations for Federal Reserve (Fed) interest rate hikes lend additional support to the USD and exert some downward pressure on the bullion.

Media reports suggested that the US and Iran have agreed to “stand down” following an exchange of strikes in and around the Strait of Hormuz over the past few days, with both countries accusing each other of violating the ceasefire agreement. Adding to this, US President Donald Trump wrote on Truth Social that Iran had requested a meeting, and it will take place in Qatar’s capital, Doha, on Tuesday. However, Deputy Iranian Foreign Minister Kazem Gharibabadi denied that there were plans for technical talks this week. This keeps geopolitical risk premiums in play and benefits the safe-haven USD.

Meanwhile, renewed US-Iran hostilities sparked fears of inflation, which, along with the Fed’s more hawkish tilt, bolsters bets for higher interest rates. According to the CME Group’s FedWatch Tool, traders are still pricing in around a 63% chance that the US central bank will raise borrowing costs in September and assigning over an 80% probability of a move by the end of this year. The outlook, in turn, is seen as another factor contributing to the bid tone surrounding the USD and driving flows away from the non-yielding Gold, which now seems to have found acceptance below the $4,000 psychological mark.

Furthermore, the Japanese Yen (JPY) plunged to a fresh four-decade low vs the USD, causing collateral damage in precious metal markets. Traders now look to Tuesday’s US economic docket, featuring the Conference Board’s Consumer Confidence Index and JOLTS Job Openings data. The focus, however, will be on Fed Chair Kevin Warsh’s appearance on Thursday at the European Central Bank (ECB) Forum in Sintra. Apart from this, the popularly known Nonfarm Payrolls (NFP) report will offer cues about the Fed’s policy path, which will drive the USD and influence the Gold price.

XAU/USD 4-hour chart

Gold bears turn cautious amid oversold RSI; downside potential intact below $4,000

Against the backdrop of the recent repeated failures near the 100-period Simple Moving Average (SMA) on the 4-hour chart, acceptance below the $4,000 mark could be seen as a fresh trigger for the XAU/USD bears. Meanwhile, the Moving Average Convergence Divergence (MACD) indicator sits just below the zero line with a small negative reading, hinting at waning downside momentum rather than a clear recovery. However, the Relative Strength Index (RSI) near 34 flirts with oversold territory, suggesting that selling pressure could start to tire without yet signalling a confirmed bullish reversal.

Any meaningful recovery back above the $4,000 mark, however, is likely to confront an immediate hurdle near the $4,045 region, above which the Gold price could aim to reclaim the $4,100 mark. A further move up could attract fresh sellers and remain capped near the 100-period SMA at $4,180.34. A sustained break above this barrier would be needed to alleviate the current bearish bias and open the door to a more constructive recovery phase.

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