- Spot gold prices rose over 1% on Monday to $4,559.07 per ounce, primarily due to expectations of a breakthrough in US-Iran peace talks, which pressured the US dollar index and led to a significant over 5% pullback in Brent crude oil futures.
- Although gold prices recovered some ground in the short term, their upward potential remains limited by expectations of hawkish interest rate policies from the new Federal Reserve Chairman Kevin Warsh, and substantial differences between the US and Iran on core issues such as the nuclear program.
- The technical structure shows that gold remains within a descending parallel channel, with the upper boundary of the channel overlapping with the 200-period exponential moving average on the 4-hour chart near $4,650, forming a strong short-term resistance zone.
Geopolitical Changes and Oil Price Linkage
The marginal progress in US-Iran peace talks became the core catalyst for cross-market asset volatility on Monday. According to foreign media reports, both parties are close to signing a memorandum of understanding that includes extending a 60-day ceasefire and reopening the Strait of Hormuz. This news quickly reflected in the energy market, with Brent crude oil prices dropping over 5%, effectively alleviating market concerns about supply-side disruptions leading to imported inflation. The decline in oil prices indirectly lowered long-term inflation expectations, while also dampening the dollar's safe-haven demand, providing short-term liquidity support for dollar-denominated spot gold, pushing gold prices above the $4,550 mark.
Central Bank's Hawkish Stance and Non-Yielding Assets
However, the long-term macro pressure on gold as a non-yielding asset has not been fundamentally eliminated. Kevin Warsh was officially sworn in as the Federal Reserve Chairman last Friday, and the current macro backdrop appears complex due to inflation rebounds triggered by previous geopolitical conflicts. Although US consumer confidence showed signs of weakening in May, the market's hawkish pricing for a Fed rate hike in 2026 remains high. This hawkish monetary policy expectation provides bottom support for the US dollar index, causing gold to face continuous profit-taking pressure during its rebound.
Dense Resistance Zone and Bottom Confirmation
From a technical perspective, the current corrective pattern in spot gold does not indicate a fundamental trend reversal. On the 4-hour chart, although the MACD indicator is above the zero line and the histogram remains positive, the relative strength index is hovering around the mid-50s, indicating a stalemate between bulls and bears. Gold prices have not effectively broken through the upper boundary of the narrow trading range of the past week. If the market fails to attract sustained follow-up buying to break above the dense trading zone at $4,650, gold prices may return to the lower boundary of the descending channel, and it is not ruled out that they may seek to establish a long-term bottom around the key support area of $4,360.
