09.06.202612:23 Forex Analysis & Reviews: XAU/USD Price Analysis and Forecast: Gold Prices Remain Influenced by Developments in the Middle East

Gold (XAU/USD) is showing limited movement on Tuesday, remaining within a narrow range during the European session. The U.S. dollar retreated from a two-month high after Iran and Israel announced on Monday that they would halt mutual attacks following a call from U.S. President Donald Trump. This development has provided moderate support for the precious metal. Nevertheless, market participants remain cautious and prefer to wait for further developments in the Middle East, keeping prices near the lowest levels seen since March 23, recorded the previous day.

At the same time, diplomatic contacts between the United States and Iran remain stalled due to significant disagreements over Tehran's nuclear program. In particular, Trump emphasized that any peaceful resolution must eliminate the possibility of Iran developing nuclear weapons. Iran, in turn, continues to insist on international recognition of its sovereignty, control over shipping through the Strait of Hormuz, the removal of sanctions, and the unfreezing of its assets. These substantial differences continue to support a geopolitical risk premium, sustaining demand for safe-haven assets.

In addition, shipping activity through the strategically important Strait of Hormuz remains constrained, maintaining elevated volatility in energy markets. This increases inflation risks and strengthens expectations of tighter monetary policy from major central banks, including the U.S. Federal Reserve. According to CME Group's FedWatch Tool, the market currently assigns a probability of more than 70% to a Federal Reserve interest-rate increase before year-end. This factor is keeping U.S. Treasury yields elevated, limiting downward pressure on the dollar and restraining gains in non-yielding gold.

Investors may also remain cautious ahead of upcoming U.S. inflation data. Reports on the Consumer Price Index (CPI) and Producer Price Index (PPI) for May are scheduled for release on Wednesday and Thursday, respectively. These indicators are key to assessing the future path of Federal Reserve monetary policy and, consequently, the direction of the U.S. dollar.

At the same time, geopolitical developments are likely to remain a source of additional volatility and short-term price swings for gold. Overall, current fundamental conditions continue to favor a bearish outlook for XAU/USD, and any recovery attempts are likely to attract renewed selling interest.

From a technical perspective, last week's consolidation below the 200-day Simple Moving Average (SMA) reinforced bearish sentiment. However, the subsequent decline lost momentum near the $4,260 level. Therefore, it would be prudent to wait for a decisive break below this area before considering new short positions.

Technical indicators remain in negative territory, suggesting that bears continue to hold the advantage. The Relative Strength Index (RSI) is approaching oversold conditions, which is limiting aggressive selling activity.

The nearest resistance level is located at $4,350, followed by resistance near the 200-day Exponential Moving Average (EMA) and the psychological level of $4,400. Beyond that, gold will face resistance at the 200-day SMA near $4,435.

A break above this level would help bulls reduce the current downward pressure, after which the next obstacle would be the 20-day SMA near the psychological level of $4,500.

This area remains a significant barrier that continues to limit upward potential within the prevailing bearish market structure.