Gold Trades Below $4,050 as Fed Rate Expectations and Stronger Dollar Weigh on Prices

Gold (XAU/USD) recovered modestly from its lowest level since November 2025 during early Tuesday trading, although the rebound eased as the European session began. Prices remained below the $4,050 level, with earlier gains partially fading.

Geopolitical Developments Remain Uncertain

Reports indicated that the United States and Iran had discussed reducing tensions following recent exchanges near the Strait of Hormuz, although officials from both sides have continued to issue differing statements regarding the status of any ceasefire or future talks. US President Donald Trump said on Truth Social that Iran had requested a meeting in Doha, while Iranian Deputy Foreign Minister Kazem Gharibabadi denied that technical discussions were scheduled this week.

The differing statements have maintained uncertainty surrounding geopolitical developments, which has continued to support demand for traditional safe-haven assets, including the US Dollar.

Fed Expectations Remain a Key Market Focus

According to CME Group's FedWatch Tool, market pricing currently reflects roughly a 63% probability of a Federal Reserve rate increase in September, with year-end expectations remaining elevated. Together with inflation concerns linked to geopolitical developments, these expectations have supported the US Dollar and continued to weigh on non-yielding assets such as gold.

Gold has recently traded below the $4,000 psychological level, which some technical analysts interpret as a sign of continued downside pressure.

Separately, the Japanese Yen weakened to its lowest level against the US Dollar in several decades, which coincided with broader pressure across precious metals.

Market Focus This Week

Market attention this week is likely to focus on remarks from Federal Reserve officials at the ECB Forum in Sintra, along with the upcoming US Nonfarm Payrolls (NFP) report. Both events may influence expectations for US monetary policy and the direction of the US Dollar.

Technical Levels Remain in Focus

On the four-hour chart, gold has repeatedly encountered resistance near the 100-period Simple Moving Average (SMA). The MACD remains below the zero line, although negative momentum has moderated, while the Relative Strength Index (RSI) near 34 approaches oversold territory without confirming a reversal.

If prices recover above the $4,000 level, initial resistance is located around $4,045, followed by another notable resistance area near $4,100. A sustained move above the 100-period SMA around $4,180.34 could indicate improving technical conditions.