Gold (XAU/USD) remained under selling pressure during Tuesday’s Asian session, extending the previous day’s rejection from the $4,100 resistance area and falling below $4,050, effectively closing the weekly bullish gap. Rubinax’s brokers take a closer look at this topic in the accompanying article.
The move reflects persistent USD strength, supported by ongoing geopolitical risks, while investors remain cautious ahead of the highly anticipated Federal Open Market Committee (FOMC) policy decision on Wednesday.
USD Demand Continues to Pressure Gold
The dominant macro driver remains the US Dollar, which continues to outperform despite easing Fed tightening expectations. A stronger USD reduces the attractiveness of non-yielding assets such as Gold, as bullion becomes more expensive for holders of other currencies while offering no coupon or interest income.
Recent developments suggesting potential diplomatic progress between the United States and Iran contributed to a sharp decline in crude oil prices, reducing immediate inflation expectations.
Lower energy prices typically decrease expectations of additional monetary tightening, although the resulting decline in US Treasury yields has so far failed to generate sustained buying interest in Gold.
Geopolitical Risks Continue Supporting Safe-Haven USD Flows
Despite improving diplomatic signals, geopolitical risk premiums remain elevated across the Middle East, preventing a meaningful deterioration in safe-haven demand.
Military operations have been temporarily suspended, increasing expectations of renewed negotiations. However, warnings that military action could resume if diplomatic efforts fail continue to limit investor optimism.
Meanwhile, reported drone attacks involving Saudi Arabia, Jordan, and Iraq underline the fragile regional security environment. Additional concerns emerged after Iran-backed Houthi forces announced a maritime blockade targeting Saudi Arabia and launched attacks against energy infrastructure along the Red Sea.
Shipping activity through the Strait of Hormuz remains restricted, while increasing attention has shifted toward the Bab el-Mandeb Strait, another strategically important global energy corridor responsible for a significant share of international maritime trade.
Although Gold traditionally benefits from elevated geopolitical uncertainty, current market conditions continue to favor the US Dollar, reflecting investors’ preference for USD liquidity ahead of a major central bank event.
FOMC Decision Becomes the Primary Market Catalyst
The market’s immediate focus is the conclusion of the two-day FOMC meeting, where policymakers are expected to leave the Federal Funds Rate unchanged while providing updated guidance on the future trajectory of monetary policy.
Attention will primarily center on the policy statement, the dot plot, revised GDP, inflation, and unemployment forecasts, together with the tone of the post-meeting press conference.
A more hawkish policy outlook, emphasizing persistent inflation risks and delaying expectations for future rate cuts, would likely reinforce USD demand, increase real yields, and extend downside pressure on Gold.
Conversely, any indication that policymakers are becoming more confident that inflation is converging toward target could accelerate expectations for future policy easing, weakening the USD and supporting a recovery in Gold prices.
Technical Structure Remains Bearish
From a technical perspective, Gold continues to trade within a broader bearish trend, following the confirmed breakdown below the 200-day Simple Moving Average (SMA). Since June 19, price action has developed into a bearish consolidation pattern, characterized by repeated failures to establish acceptance above major resistance levels.
Momentum indicators present a mixed but still negative picture. The Relative Strength Index (RSI) remains near 45, below the neutral 50 threshold, indicating weak buying momentum without entering oversold territory.
Meanwhile, the Moving Average Convergence Divergence (MACD) has turned modestly higher while remaining in positive territory, suggesting that recent rebounds represent corrective price action rather than a confirmed trend reversal.
From a price structure standpoint, the sequence of lower highs combined with repeated rejection below $4,100 continues to favor sellers.
The immediate support zone is located at the psychological $4,000 level. A confirmed daily close below this threshold would complete another bearish continuation signal, increasing the probability of an accelerated decline as additional stop-loss orders and momentum-driven selling enter the market.
On the upside, the first resistance remains at $4,100, followed by the upper boundary of the current consolidation range near $4,200. A sustained break and daily close above $4,200 would invalidate the short-term bearish structure and expose the next major resistance represented by the 200-day SMA at $4,493.65.
Outlook
The short-term outlook for Gold remains bearish, with USD strength, persistent geopolitical uncertainty, and cautious positioning ahead of the FOMC limiting upside potential.
While downside momentum has slowed as traders await the central bank decision, the broader technical structure continues to favor sellers as long as XAU/USD remains below $4,100 and, more importantly, beneath the $4,200 resistance zone.
A decisive break below the $4,000 psychological support would strengthen the bearish outlook, while only a sustained recovery above $4,200 would signal a meaningful improvement in market sentiment.