Gold (XAU/USD) was little changed on Tuesday, trading near two-and-a-half-month lows around $4,268 after rallies stalled below $4,360. A modest improvement in risk sentiment, following a pause in Middle East hostilities, did little to lift the metal, as higher US Treasury yields continued to weigh despite a softer US Dollar. Israel and Iran held a tense truce, while an Israeli strike on Tyre killed eight people; Donald Trump said he was confident of reaching a deal with Tehran within days. Markets are now focused on Wednesday’s US CPI release after last week’s Nonfarm Payrolls report reinforced expectations of tighter Federal Reserve policy.

Technically, XAU/USD was quoted near $4,337 and remained biased lower after slipping under the 200-day SMA last Friday. Price action sits near the base of a descending channel, with resistance seen around $4,370 and support at $4,268, then near $4,220, with the year-to-date low around $4,100. Momentum indicators remain weak, as RSI sits in the mid-30s and MACD is firmly negative. A recovery would need a break through $4,350–$4,365 and the 200-day SMA near $4,445 to open $4,540.

—

Market Drivers and Technical Levels

We see gold holding its ground below the $2,320 level as we move into the second week of June 2026. The primary weight on the price comes from firm US Treasury yields, with the 10-year note hovering around 4.4%, making a non-yielding asset like gold less appealing. This dynamic is effectively capping any significant upward momentum for now.

This pressure is directly tied to market expectations for Federal Reserve policy. The surprisingly strong US jobs report from last Friday, which showed the economy added 272,000 jobs in May, has dampened hopes for imminent interest rate cuts. This delay in monetary easing is likely to keep the US Dollar and Treasury yields strong, acting as a headwind for gold in the near term.

From a trading standpoint, we are watching crucial technical levels. Any rally will likely face significant resistance near the 50-day moving average, which currently sits around $2,345. On the downside, the recent support established near $2,285 is the key level to watch, as a break below it could signal a move toward the $2,200 area.

—

Trading Strategies and Long-Term Support

For derivative traders, this environment suggests maintaining a cautious to bearish stance over the next few weeks. We believe that buying put options with strike prices below the $2,285 support level offers a clear, risk-defined way to position for further weakness. This strategy protects against potential losses if the market were to suddenly reverse and rally on unexpected news.

With the US Consumer Price Index (CPI) report due this Wednesday, we anticipate a significant increase in price volatility. Traders who expect a large price swing but are uncertain of the direction could consider a long strangle strategy. This would involve buying both an out-of-the-money call and an out-of-the-money put to profit from a sharp move in either direction following the data release.

However, we must also acknowledge the strong undercurrent of support from global central banks. The World Gold Council reported that central banks added a net 290 tonnes to their reserves in the first quarter of 2024, continuing a trend of historic buying. While this is not driving short-term price action, it does provide a solid long-term floor that should prevent a more dramatic price collapse.