Gold Slumps 1.55% To $4,126.54; Hawkish Fed Bets & Firm DXY Crush Bullion’s Short-Lived Rally

Spot gold tanked 1.55% to $4,126.54 per ounce during Tuesday’s Asian session, erasing Monday’s 0.7% rebound fuelled by US-Iran diplomatic optimism. COMEX US gold futures tumbled 1.39% to $4,151.10, while peer precious metals suffered deeper losses: silver shed 3.80% to $62.93/oz, platinum fell 2.03% to $1,646.60/oz.

The precious metal came under relentless selling pressure from two dominant headwinds: a resilient US Dollar Index lingering near its recent 13-month high of 101.13, and surging market bets that the Federal Reserve will implement extra rate hikes before the end of 2026.

Dollar strength stems entirely from last week’s landmark FOMC meeting, Kevin Warsh’s debut gathering at the Fed helm. Though policymakers locked rates at 3.50%-3.75%, revised dot plot projections revealed broad committee backing for at least one 25bp tightening move this year. CME FedWatch data now prices a 92% probability of a December rate hike, with over 60% odds pointing to two total hikes in 2026.

A stronger greenback makes dollar-denominated gold costlier for overseas buyers, while elevated interest rates erase appeal for non-yielding bullion, stripping away its primary investment demand catalyst.

Markets priced in modest relief from ongoing US-Iran peace talks held in Switzerland. Washington issued a 60-day sanctions waiver covering Iranian crude exports, and US negotiators characterised dialogue as constructive. Still, traders remain sceptical a binding permanent accord will materialise, limiting safe-haven inflows into gold.

While bullion typically acts as a geopolitical hedge, investors are prioritising inflation spillover risks from Middle East hostilities. Regional conflict has repeatedly sent crude prices surging, stoking fears that energy-fuelled inflation will force the Fed to maintain restrictive monetary policy far longer.

All investor focus shifts to the critical May PCE inflation print due Thursday, the Fed’s preferred inflation gauge, which will steer near-term rate pricing and gold’s directional trajectory.

XAU/USD Technical Analysis

Gold extended its Asian session selloff to hit a near two-week trough around $4,114, dragged lower by uninterrupted bullish momentum across the US Dollar Index, which trades at levels unseen since May 2025. Lingering doubt over the durability of the US-Iran truce further curbed safe-haven buying for the metal.

source：tradingview

On the 4-hour timeframe, XAU/USD retains a solid near-term bearish bias, trading firmly beneath the key 100-period SMA at $4,311.19.

· The MACD (12,26,9) edged marginally positive with its signal line sitting just above the zero threshold, hinting at mild corrective relief potential.

· The 14-period RSI reads 37.17, stuck in weak bearish territory, confirming any bounce will only qualify as temporary counter-trend consolidation.

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Key Resistance

The pivotal overhead barrier sits at the 100-period SMA of $4,311.19. Only a sustained four-hour close above this level will ease immediate downside pressure and unlock a meaningful corrective recovery. Failure to reclaim this zone leaves gold exposed to additional near-term losses.

Key Support

Immediate downside support anchors at the session low of $4,115. A decisive break below this level will open further downside toward fresh swing lows.