The price of gold (XAU/USD) was up a modest 0.35% on Tuesday, coming off a more than 11% loss to end the month after retreating from monthly highs around $4,500 to $4,000, weighed on overall US dollar strength. The XAU/USD pair is trading at $4,026 after hitting an eight-month low of $3,942 earlier in the day.
XAU/USD steady as dollar strength maintains monthly losses
The main reason behind gold’s fall in June was the US-Iran war, which led to increased oil prices and damage to the US dollar. Although they have signed a memorandum of understanding (MoU) to end the conflict and oil prices have eased, the yellow metal failed to gain momentum amid expectations that major central banks may raise interest rates.
Bullion prices remain good in a low interest rate environment. Speculation that the Federal Reserve (Fed) might raise rates boosted the greenback and pushed US Treasury yields higher.
The US dollar index (DXY), which measures the dollar’s performance against six currencies, was up 0.07% at 101.17. US 10-year Treasury yields rose 3.5 basis points to 4.412%.
Currency markets anticipate 35 basis points more tightening by the Federal Reserve by December 2026, according to data from Prime Terminals, although a policy change is not expected in July.
Over the weekend, hostilities between Washington and Tehran tested the fragility of the MOU. However, both sides halted attacks as US President Donald Trump’s envoy flew to Doha to resume talks.
Meanwhile, Cleveland Fed President Beth Hammack took an hawkish stance, insisting that inflation is too high and, if consumer data is correct, monetary policy is not restrictive enough. He said the Fed “may need to consider raising rates.”
According to the US Bureau of Labor Statistics (BLS), data from the US showed that JOLTS unexpectedly increased in May, indicating rising vacancies but weak hiring. Job openings rose by 7.594 million, beating April’s forecast of 7.3 million and April’s revised forecast of 7.585 million.
US Conference Board Consumer confidence improved in June as a ceasefire agreement between the US and Iran helped lower gasoline prices.
Ahead, amid a shortened week due to the US holidays, traders have an eye on ADP National Employment Changes data on Wednesday, ahead of the US Nonfarm Payrolls report on Thursday.
XAU/USD Technical Outlook: Gold continues its downward trend, eyes $3,500
From a technical perspective, gold is biased from neutral to downside, as it has recorded successive series of lower highs and lower lows. The momentum as measured by the Relative Strength Index (RSI) is bearish, although it indicates that selling pressure has subsided in the short term, as the slope is upward.
For a bullish reversal, gold would need to clear $4,100. A breach of the latter would highlight a daily high of $4,220 on June 22, followed by a down-sloping resistance trend line around the $4,280-$4,300 area. If those levels are taken, the next stop will be the 50-day simple moving average (SMA) at $4,439.
On the downside, the first support will be the day’s low at $3,941. Once crossed, $3,900 is a move higher, followed by a low of $3,886 on October 28, 2025. On further weakness, the next area of interest will be $3,500, the April 22, 2025, daily high support.
Sona FAQ
Gold has played an important role in human history as it has been widely used as a store of value and medium of exchange. Currently, apart from its luster and use for jewellery, the precious metal is widely viewed as a safe-haven asset, meaning it is considered a good investment during turbulent times. Gold is also widely seen as a hedge against inflation and falling currencies because it is not dependent on any specific issuer or government.
Central banks are the largest holders of gold. In their aim to support their currencies in turbulent times, central banks diversify their reserves and purchase gold to improve the perceived strength of the economy and currency. High gold reserves can be a source of confidence for a country’s solvency. Central banks added 1,136 tonnes of gold, worth about $70 billion, to their reserves in 2022, according to World Gold Council data. This is the highest annual purchase since records began. Central banks of emerging economies like China, India and Türkiye are rapidly increasing their gold reserves.
Gold has an inverse relationship with the US dollar and US Treasuries, which are both major reserve and safe-haven assets. When the dollar depreciates, gold rises, helping investors and central banks diversify their assets in turbulent times. Gold is also inversely correlated with risky assets. Stock market rallies weaken the price of gold, while selling in riskier markets benefits the precious metal.
The price may increase due to a variety of factors. Gold’s safe-haven status could cause its price to rise sharply due to geopolitical instability or fears of a deep recession. As a yield-low asset, gold tends to rise with low interest rates, while higher costs of money generally weigh on the yellow metal. Still, most of the moves depend on how the US dollar (USD) behaves as the asset is priced in dollars (XAU/USD). A strong dollar keeps the price of gold in check, while a weak dollar is likely to push gold prices higher.
