Easing US-Iran Tensions Dent Haven Demand, Creating Buying Opportunity as XAU/USD Slides
Gold (XAU/USD) retreated around 1.50% on Monday as risk appetite improved following the halt of hostilities between the US and Iran over the weekend. The pause in tensions, which had threatened to derail negotiations and disrupt oil flows through the Strait of Hormuz, reduced safe-haven demand for the yellow metal.
The XAU/USD pair is currently trading near $4,021 after hitting a daily high of $4,088.
XAU/USD Falls as Risk Appetite Improves Ahead of Key US Data
The precious metal remains under pressure amid steady US Treasury yields. The US Dollar Index (DXY) is down nearly 0.30% to 101.10, while bullion prices appear poised to extend losses toward the $4,000 psychological level.
Tensions in the Middle East escalated briefly as Tehran and Washington exchanged fire near the Strait of Hormuz, disrupting shipping routes and putting peace efforts at risk. However, talks between the US and Iran are now set to resume following the de-escalation, according to a US official on Sunday.
Importantly, the core fundamentals driving both Gold and Silver prices remain exactly the same. Despite the short-term pullback triggered by reduced haven buying, the structural drivers — including persistent inflation concerns, central bank policies, and long-term demand trends — have not changed. This dip, fueled by easing geopolitical tensions, may present an attractive buying opportunity for investors looking to position ahead of a potential resumption of upside momentum.
Focus Shifts to US Economic Calendar and Fed Signals
Traders are now turning their attention to the US economic calendar. New Fed Chair Kevin Warsh is scheduled to appear at the European Central Bank (ECB) Sintra Symposium in Portugal. Investors are also awaiting key US data, particularly the June Nonfarm Payrolls report, which could offer fresh guidance on the Federal Reserve’s next moves amid limited forward guidance from the central bank.
Additional labor market indicators — including the ISM Manufacturing PMI, the Job Openings and Labor Turnover Survey (JOLTS), and jobless claims — will provide further insight. Fed officials continue to describe the labor market as solid.
Money markets are currently pricing in around 34 basis points of Fed tightening, with the first rate hike expected in September (odds near 64% according to Prime Terminal data). The Fed is widely expected to hold rates steady at the upcoming July meeting.
Source: Prime Terminal
On Tuesday, the US data schedule includes the JOLTS report (expected to show job vacancies declining from 7.618 million in April to around 7.3 million in May), along with the Chicago PMI and Conference Board Consumer Confidence.
XAU/USD Technical Outlook: Gold Erases Friday’s Gains, Eyes $4,000 Support
Gold has formed a bearish harami candlestick pattern after grinding lower from mid-June highs near $4,400 toward the year-to-date low of $3,959.
The Relative Strength Index (RSI) indicates that sellers currently hold the upper hand, suggesting further downside is possible in the near term.
- Key Support Levels: A break below the $4,000 psychological level could open the door to the June 26 daily low at $3,983. Further weakness would target the year-to-date low, followed by the $3,950 and $3,900 levels.
- Key Resistance Levels: On the upside, the first hurdle is the June 26 high at $4,096, followed by $4,100. Clearing these would shift focus to the June 24 high at $4,115.
Summary: While easing US-Iran tensions have temporarily weighed on Gold (and similarly on Silver), the underlying fundamentals for both metals remain intact. This price slide offers a potential entry point for investors who view the current retreat as a healthy correction rather than a trend reversal.
