Ceasefire Fears

Gold prices have come under fresh selling pressure this week with the market weighed upon by renewed strength in USD. The Dollar has turned higher again through the middle of the week amidst rising uncertainty around the health of the US/Iran ceasefire. Following tit-for-tat attacks on Monday, there have been reports this morning of further attacks with Iran striking a US airbase in retaliation for an earlier US attack on an Iranian military site. Iran has warned that any further attacks from the US will be met with severe retaliation sparking fears that the ceasefire is at risk of collapse. US Central Command has described the attacks as “purely defensive” and “intended to maintain the ceasefire”. However, with tensions rising, USD is seeing fresh safe-haven demand, putting downward pressure on gold.

Hawkish Fed Expectations

Alongside renewed safe-haven demand for USD this week, gold prices have also been pressured by a more hawkish Fed outlook. The latest US inflation data showed headline CPI just below 4% and with energy prices still elevated and a peace deal proving elusive, inflationary pressures look set to remain for now. Against this backdrop, traders now price a more than 50% chance of a Fed hike by year end. If this pricing rises further, gold is vulnerable to a sharper push lower near-term.

Technical Views

Gold

The sell off has seen price breaking down to test support at the 4,389.24 level with the rising trend line from 2025 lows coming in just below. This is a key support area for the market which bulls need to defend to prevent a deeper drop down to the 3,898.03-level next. Near-term, price needs to be back above 4,548.82 to alleviate bearish risks.