The US Dollar Index weakens and oil prices fall, gold rebounds slightly
International gold prices remained in a narrow range during Thursday's Asian session, with XAU/USD trading near $4,560. The overall market has entered a cautious wait-and-see mode. On the one hand, investors continue to monitor the stalled peace talks between the U.S. and Iran; on the other hand, they are closely watching the latest stance of the Federal Reserve regarding the future interest rate path.
U.S. President Trump stated on Wednesday that negotiations between the U.S. and Iran have entered the "final stage," which was temporarily interpreted by the market as a potential deal and caused a brief increase in risk appetite. However, Trump also emphasized that if Iran does not accept the relevant conditions, the U.S. will resume military action in the coming days. This contradictory statement led to a rapid reversal of safe-haven sentiment, as investors reassessed the risks to global energy supply due to an escalation in the Middle East situation.
High Ridge Futures metal trading director David Meger said that if there are signs of easing in the Middle East conflict, or if the Strait of Hormuz reopens stably, the market will expect global interest rates to gradually fall, which will be bullish for the gold market in the long run. However, until the situation becomes clear, safe-haven demand may continue to drive capital into the precious metals sector.
At the same time, the minutes of the Federal Reserve's April Federal Open Market Committee (FOMC) meeting became another key market driver. The minutes showed that most Fed officials were concerned that inflation would persist above the 2% target and believed that if price pressures continued to rise, the Fed might need to reconsider the path of rate hikes. This clearly reinforced expectations that "high rates will persist for longer."
From a market sentiment perspective, gold is currently in a classic "dual-factor-driven" environment. On the one hand, geopolitical risks and safe-haven demand are supporting gold prices at high levels; on the other hand, the Fed's hawkish stance and rising U.S. real yields are capping gold's potential for rapid further gains. Therefore, investors are waiting for more economic data and greater clarity in the Middle East situation.
The market focus now turns to the preliminary U.S. May Markit Purchasing Managers' Index (PMI) data released Thursday evening. If the data shows that the U.S. economy remains resilient, the market may further price out Fed rate cuts, thereby boosting the dollar and suppressing gold in the short term. Conversely, if the PMI data shows significant weakness, expectations for rate cuts could be revived, pushing gold to retest recent highs.
The 4-hour chart shows that gold has recently moved into a high-level consolidation phase, with short-term moving averages beginning to flatten and the MACD indicator momentum weakening, indicating a slowdown in the short-term bullish rhythm. However, the RSI remains above 50, suggesting that the market remains overall strong. If the Middle East situation worsens further, gold may regain its breakout momentum; but if U.S. economic data is strong and the market continues to bet on the Fed maintaining high rates, gold may face correction pressure in the short term.
Overall, the core logic of the current gold market still revolves around "geopolitical risk" and the "Fed policy path." As long as global risk aversion does not subside significantly, gold's support at lower levels is expected to remain solid; however, the high-rate environment also means a unilateral rapid rise in the short term is unlikely.
Editor’s Summary
Currently, the gold market has entered a sensitive high-level stage, with uncertainties in the Middle East confronting hawkish Fed policy expectations. Risks in the Strait of Hormuz continue to intensify concerns over energy supply and global inflation, which provides sustained shelter for gold. At the same time, the Fed minutes show that officials remain highly vigilant about inflation, and the high-rate environment may persist longer, thus limiting gold’s further upside. Looking forward, the market will need to closely monitor changes in U.S. economic data, the evolution of the Middle East situation, and statements from Fed officials. If the U.S. economy starts to slow down while geopolitical risks remain elevated, gold may once again challenge all-time highs; but if the U.S. economy stays resilient and the Fed sticks to a hawkish stance, gold could enter a wide consolidation at high levels.
Editor: Zhu Henan
Disclaimer: The content of this article solely reflects the author's opinion and does not represent the platform in any capacity. This article is not intended to serve as a reference for making investment decisions.
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