Gold bounces back from a more-than-one-month low, though its upside appears constrained.

• Gold edges higher with modest gains, but the broader fundamentals suggest caution for bullish traders.
• Persistent inflation concerns are reinforcing expectations of more hawkish central bank policies, weighing on the metal.
• Meanwhile, rising US-Iran tensions bolster the US dollar’s safe-haven appeal, adding further pressure on gold.

Gold (XAU/USD) picks up some buying interest during Tuesday’s Asian session, partially recovering from the previous day’s drop to around the $4,500 level—its lowest in over a month. However, the rebound lacks a clear fundamental driver and could fade quickly, suggesting traders should remain cautious before expecting any sustained upside. Ongoing US-Iran tensions continue to stoke inflation fears and reinforce expectations of higher interest rates, which, alongside a stronger US Dollar (USD), is likely to cap gains in the non-yielding metal.

The fragile ceasefire between the US and Iran appears close to breaking down after renewed violence in the Persian Gulf on Monday. Both the United Arab Emirates (UAE) and South Korea reported attacks on vessels in the critical shipping lane, while the UAE confirmed a fire at the Fujairah oil port following Iranian missile and drone strikes. US President Donald Trump warned that Iran would face devastating consequences if it targeted American ships escorting vessels through the region under the “Project Freedom” initiative.

These developments heighten the risk of further escalation in the Middle East, pushing crude oil prices higher and reinforcing concerns that rising energy costs could reignite inflation. This, in turn, strengthens expectations that major central banks—including the US Federal Reserve (Fed)—may adopt a more hawkish policy stance. Data from CME Group’s FedWatch Tool now shows the probability of a Fed rate hike by year-end at around 35%, up sharply from below 10% last Friday.

The outlook supports higher US Treasury yields, which continue to underpin the USD. Additionally, tensions around the Strait of Hormuz further enhance the dollar’s appeal as a global reserve currency, adding to the bearish near-term outlook for gold. As a result, any upward moves in the metal are likely to attract selling interest, and traders may prefer to wait for stronger, sustained buying before concluding that gold has formed a bottom.

Gold (XAU/USD) 4-hour timeframe chart

Gold may find it difficult to build on its intraday gains given the prevailing bearish technical structure.

From a chart standpoint, XAU/USD continues to show a short-term negative bias as it remains below the 200-period Simple Moving Average (SMA) at $4,655.02. The metal is also constrained by the 38.2% Fibonacci retracement of the March–April rally, keeping prices trapped beneath a strong resistance zone despite a slight rebound from the $4,500 region, which aligns with the 50% retracement level.

Momentum signals are still weak, with the Relative Strength Index (RSI) staying below the neutral 50 mark at 39.84 and the Moving Average Convergence Divergence (MACD) lingering in negative territory. This suggests the current recovery attempt could lose steam near the 38.2% Fibonacci level at $4,595.23. Any further upside is likely to face resistance around the 200-period SMA at $4,655.02, followed by the 23.6% retracement at $4,711.12.

On the downside, immediate support is seen near the 50% retracement at $4,501.57, ahead of the 61.8% level at $4,407.90. If selling pressure intensifies, deeper support levels come into view at $4,274.55 and $4,104.68.