Gold Holds Steady Amid Rising US-Israel-Iran Tensions and Cautious Fed Outlook

Gold (XAU/USD) is trading in a tight range on Thursday, hovering between $3,340 and $3,400. These levels have consistently served as near-term support and resistance, with price action largely contained ahead of fresh catalysts.

With US markets closed in observance of the Juneteenth holiday, trading volumes remain subdued. Nevertheless, key macroeconomic developments and rising geopolitical risks continue to influence the broader direction of Gold prices following the Federal Reserve’s latest policy update.

Fed’s Cautious Stance Lifts the Dollar, Caps Gold Upside

As widely anticipated, the Federal Reserve left its benchmark interest rate unchanged at 4.25%–4.50% on Wednesday. While the Fed’s updated projections indicated two rate cuts by the end of 2025, markets were taken aback by Chair Jerome Powell’s cautious tone during his post-meeting remarks.

Gold initially climbed toward the $3,400 mark following the dovish shift in projections. However, Powell’s emphasis on a data-dependent approach and his persistent concerns over sticky inflation dampened market optimism, leading to a rebound in the US Dollar and curbing Gold’s intraday gains.

While long-term US Treasury yields eased on the rate cut outlook, short-term yields edged higher in response to Powell’s firmer tone—highlighting the Fed’s hesitancy to declare an end to the inflation battle.

Geopolitical Risk from Israel-Iran Conflict Keeps Gold Supported

Outside of monetary policy, escalating tensions between Israel and Iran continue to support Gold’s safe-haven appeal. Market anxiety has grown amid speculation that the US may deepen its military involvement in the region.

Potential disruptions to global oil supply routes—particularly through the critical Strait of Hormuz—could revive inflationary pressures and strengthen demand for precious metals as a hedge.

Adding to the uncertainty, former US President Donald Trump is scheduled to meet with national security officials on Thursday—his second such meeting this week—to assess the country’s potential response to the intensifying Middle East conflict.

With macroeconomic crosswinds and geopolitical risks in play, Gold remains caught between competing forces. A decisive breakout above or below the current $3,340–$3,400 range may depend on further clarity from US policymakers or an escalation in global tensions.

Daily Digest Market Movers: Key Factors Influencing Gold

• Tensions surrounding Iran's expanding nuclear program and instability in the Middle East are increasingly shaping the outlook for Gold (XAU/USD). Iran's growing stockpile of enriched uranium has raised fresh concerns over its nuclear ambitions, prompting strong warnings from both Israel and the United States, who have publicly stated that a nuclear-armed Iran would be unacceptable.
• One major geopolitical flashpoint is the Strait of Hormuz—a vital maritime corridor at the northern tip of the Persian Gulf. Around 20% of the world’s energy supply flows through this narrow chokepoint. Any disruption to traffic in the Strait, particularly amid rising conflict, could send global oil prices soaring. This would likely reignite inflationary pressures globally and further complicate the U.S. Federal Reserve’s monetary policy trajectory.
• Amid these developments, political volatility has added to investor unease. On Wednesday, former President Donald Trump called for an aggressive 2.5% rate cut and labeled Fed Chair Jerome Powell as “stupid,” criticizing his leadership with Powell’s term set to end in May 2026. While these comments have not had an immediate impact on markets, they have injected further uncertainty into the economic backdrop.
• In contrast, Chair Powell emphasized that the U.S. economy remains resilient but warned of emerging risks from tariffs and global trade friction. His comments reinforced the Fed’s commitment to a data-dependent approach in assessing future interest rate adjustments.
• A potential escalation in Middle East tensions could continue to bolster safe-haven demand for Gold. However, rising U.S. Treasury yields—driven by sticky inflation and reduced expectations for near-term rate cuts—may limit the metal’s upside.

Technical Outlook: Gold Bulls Face Resistance Near $3,370

From a technical perspective, Gold (XAU/USD) remains in a consolidation phase, with the recent rally losing steam around the $3,370 level. The Fibonacci retracement drawn from the April swing low near $2,955 to the high of $3,500 outlines critical price zones.

At the time of writing, XAU/USD is hovering around $3,365. Immediate resistance lies at $3,371, which marks the 23.6% Fibonacci retracement level of the April uptrend. This level aligns closely with the 20-day Simple Moving Average (SMA) at $3,350—making it a crucial short-term decision zone.

A breakout above $3,371 could trigger fresh bullish momentum, with $3,400 serving as the next psychological barrier. A further move higher may test the weekly high of $3,452 and potentially retarget the all-time high of $3,500 seen in April.

On the flip side, a drop below the 20-day SMA would bring the 50-day SMA near $3,314 into focus. Further downside could extend toward the key psychological support at $3,300.

Momentum indicators are signaling a loss of upward strength. The Relative Strength Index (RSI) has slipped to 54 from 60 last week, reflecting a more neutral sentiment among traders.

Gold daily chart