Gold prices edge higher as investors weigh mixed US Retail Sales data and rising geopolitical risks in the Middle East

Gold prices advanced on Tuesday, with XAU/USD trading near $3,392 as safe-haven demand surged amid escalating geopolitical tensions and mixed US economic data. The precious metal found support as investors assessed the latest US Retail Sales figures and growing concerns over the Middle East conflict.

May’s Retail Sales report showed a sharper-than-expected 0.9% decline—the steepest drop since early 2024—while sales excluding autos also slipped by 0.3%, signaling broad consumer weakness. However, the control group, which feeds directly into GDP calculations, rose 0.4%, offering signs of underlying strength in core consumption.

These conflicting signals leave the Federal Reserve’s policy path uncertain. While the weak headline data supports the case for potential rate cuts, the control group’s resilience may delay such moves.

Meanwhile, geopolitical risks remain a key market driver. The Israel-Iran conflict has intensified with renewed missile and drone attacks, heightening fears of regional escalation. Growing threats to the Strait of Hormuz—vital for global oil supply—are further fueling demand for safe-haven assets like gold, as traders hedge against potential global disruptions.

Daily Digest Market Movers: Key Drivers Behind Gold's Price Action

Gold (XAU/USD) continues to edge higher as geopolitical tensions in the Middle East intensify and traders brace for the Federal Reserve’s updated economic projections. The escalating Israel–Iran conflict remains a critical upside risk to global inflation, particularly due to its potential impact on Oil supply and key shipping lanes. Any sharp escalation could trigger a spike in energy prices, stall progress in disinflation, and prompt central banks to maintain higher interest rates for longer. While such a scenario may support Gold’s role as an inflation hedge, it also introduces headwinds from elevated US yields.
Former US President Donald Trump denied initiating peace talks with Iran, calling the claims “FAKE NEWS” in a Truth Social post on Tuesday. He warned that Iran “should have taken the deal” and emphasized that further military action could be imminent, urging Iranian civilians to evacuate Tehran. Israeli Prime Minister Benjamin Netanyahu echoed this warning as airstrikes intensified on Iranian military and nuclear infrastructure. In response, Iran’s Revolutionary Guards launched a new wave of missile and drone attacks targeting Israel, raising the specter of a broader regional conflict. This heightened uncertainty has driven Gold prices back toward the $3,400 mark.
Looking ahead, markets are focused on Wednesday’s release of the Federal Reserve’s Summary of Economic Projections (SEP) and dot plot. Investors will be watching closely for any revision in the Fed’s 2025 rate cut outlook, especially in light of persistent inflationary pressures and geopolitical instability.

Technical Analysis: XAU/USD Eyes Breakout as Bulls Regain Control

Gold is currently consolidating near $3,392, holding firmly above the $3,375–$3,380 support zone on the 4-hour chart. Price action is being capped by the 20-period Simple Moving Average (SMA) at $3,408, which coincides with minor resistance.

The 23.6% Fibonacci retracement of the recent rally provides interim support at $3,371, while the 50-period SMA around $3,365 serves as an additional layer of defense for bulls. A sustained push above $3,408 could clear the path for a retest of the monthly highs at $3,446 and $3,452.

On the flip side, failure to hold the $3,371 level may open the door to a deeper correction, with the next major support seen near $3,292 — the 38.2% Fibonacci retracement zone. The Relative Strength Index (RSI) currently sits near 50, reflecting neutral momentum but leaving room for further directional movement as volatility builds.

As investors await the Fed’s rate guidance, Gold remains at the mercy of both geopolitical developments and central bank signals.

Gold 4-hour chart