Gold fell on Tuesday, trading near $4,482 after an intraday low of $4,464, its lowest level since March 30. Traders watched US-Iran negotiations alongside wider macro conditions tied to the ongoing conflict.
Donald Trump said on Monday he halted an immediate planned military attack on Iran after Gulf leaders asked for more time for talks. He also said any deal would mean no nuclear weapons for Iran, while ordering the US military to stay ready for a “full, large-scale assault” if talks fail.
Drivers Of The Move
Gold is down nearly 15% since the war began, as markets focus on inflation risks from higher oil prices and disruption around the Strait of Hormuz. This has lifted expectations for tighter monetary policy.
The CME FedWatch Tool shows nearly a 50% probability the Fed raises rates by at least 25 basis points by year-end, up from 35% a week ago. The US 10-year Treasury yield was near 4.60%, close to a one-year high, while the Dollar Index was around 99.33.
Upcoming focus includes Fed minutes on Wednesday, preliminary May PMI on Thursday, and the University of Michigan survey on Friday. Technically, the 200-day SMA is $4,358, RSI is near 40, ADX near 19, resistance sits at $4,705, $4,793 and $4,850, with support at $4,500 and $4,358.
Given the ongoing pressure, we see gold’s recent weakness as being driven primarily by monetary policy expectations rather than geopolitical safety flows. The persistent conflict’s main effect has been to boost oil prices, which is fueling inflation and strengthening the case for the Federal Reserve to raise rates. This dynamic is pushing up both the US dollar and Treasury yields, creating a difficult environment for non-yielding assets like gold.
Trade Implications And Risks
This situation is reinforced by the latest economic data. The most recent April 2026 Consumer Price Index (CPI) report showed a year-over-year increase of 4.1%, higher than the 3.9% that was anticipated, giving the Fed little room to back away from its hawkish stance. With the 10-year Treasury yield holding firm above 4.5%, the cost of holding gold instead of interest-bearing government bonds is a major headwind for us.
For derivatives traders, this suggests that selling out-of-the-money call options or establishing bear call spreads could be an effective strategy in the coming weeks. With significant technical resistance identified near the 50-day moving average around $4,705, these positions would allow us to collect premium from the expectation that gold will struggle to rally past these levels. The weak ADX reading further suggests a lack of strong directional momentum, which favors strategies that profit from range-bound or slowly declining price action.
We have to remember how this differs from the market environment in 2025. Last year, we saw a similar inflation scare in the third quarter, but it quickly subsided as energy prices stabilized. In contrast, the current conflict has kept Brent crude prices above $110 per barrel for over eight weeks, embedding inflation expectations more deeply and forcing the Fed’s hand much more firmly than it did back in 2025.
The primary risk to a bearish gold position remains a sudden diplomatic breakthrough with Iran. A verifiable peace deal would likely send oil prices tumbling, which would in turn reduce inflation expectations and cause bond yields to fall. Such a scenario would remove the main weights holding gold down and could trigger a sharp rally.
Therefore, our focus remains on the upcoming Fed meeting minutes and May’s PMI data later this week for clues on the central bank’s thinking. We are watching the $4,358 level, which corresponds to the 200-day moving average, as a critical line of support. A clean break below that price would confirm a deeper bearish trend, prompting more aggressive short positions.
