Geopolitics Leaves No Chance for Gold Buyers

XAU/USD

Key zone: 4,400.00 - 4,650.00

Buy: 4,680.00 (on a decisive break of the 4,600 level); target 4,800-5,000; StopLoss 4,580.00

Sell: 4,350.00 (on strong negative fundamentals); target 4,000.00; StopLoss 4,450.00

Gold traders remain hesitant, as hopes for peace in Iran clash with hawkish Federal Reserve rate expectations and a bullish U.S. dollar. Gold prices are trading with a slight bearish bias, although they remain within the broader range maintained since the beginning of this week.

Growing expectations of U.S. Federal Reserve interest rate hikes this year continue to provide a tailwind for the U.S. dollar and undermine gold’s position.

The destructive economic impact of the war in the Middle East is becoming increasingly evident in business survey results. Preliminary May PMI data showed only moderate growth in business activity, as demand was once again suppressed by another surge in prices, while jobs were cut as companies feared rising costs and deteriorating economic prospects.

No significant reaction to the latest economic data has been observed in the gold market. Spot gold was last trading at $4,505.30, down nearly 1% on the day. Gold may attract investor attention as momentum in the U.S. manufacturing and services sectors remains subdued.

U.S. Treasury yields are currently the most dangerous factor for gold bulls. The market is concerned about rising inflation, expensive oil, military risks, and growing U.S. government debt. Historically, 10-year yields above 4.5% create pressure on XAU/USD. If yields move above 4.7–4.8%, gold may accelerate its decline.

Nevertheless, only geopolitics is preventing gold from a full-scale collapse. The main risks remain unchanged: the conflict around Iran, a blockade of the Strait of Hormuz, speculation in the oil market, and capital flight into safe-haven assets. Any escalation in the Middle East will instantly bring buyers back into gold and could trigger another short squeeze.

And what is the result?

Next week, attention should be focused on speeches by Federal Reserve officials, U.S. inflation data, yields on 10-year U.S. Treasuries, the DXY dollar index, and, of course, news regarding Iran and oil. The conflict shows few signs of ending in the short term, which generally keeps markets under tension.

Gold remains in a phase of high volatility, but without a clear trend.

In the long term, gold remains a structurally strong asset and a hedge against inflation and debt crises. However, the market is currently in a phase of deep overbought conditions and is overly dependent on the geopolitical information backdrop.

Large timeframes suggest that bears retain control, but remain in a state of pause. Selling is only justified on pullbacks from strong resistance levels, while buying is appropriate only with support from the fundamental backdrop.

So we act wisely and avoid unnecessary risks.

Profits to y’all!