Investing.com — Gold prices on Tuesday rose nearly 2%, catching a bid after continuously testing the key psychological level of $4,000/oz since mid-July. The gains came even as the dollar firmed and oil prices rose amid elevated tensions between the U.S. and Iran, keeping inflationary concerns on the table.
At 16:43 ET (20:43 GMT), climbed 1.8% to $4,081.07/oz, while ticked up 1.7% to $4,085.37/oz.
“It looks as if gold’s resilience as it repeatedly held support just south of $4,000 was enough to bring the buyers back, while short sellers simply melted away. The next question: is this rally sustainable? Gold has some big levels to break on the upside with $4,200 an obvious and significant resistance level. As things stand, the daily MACD looks a bit tired, suggesting that there’s not much upside momentum,” David Morrison, senior market analyst at Trade Nation, said.
“So, it could be that prices consolidate for a bit now which could help improve the picture for the bulls. But if prices did retreat to $4,000 once again, that would really weigh on bullish sentiment,” he added.
Track gold, inflation trends and Fed expectations with InvestingPro – now 60% off
The U.S. on Monday completed a tenth straight day of strikes against Iran, while the country retaliated with attacks on a tanker in the Strait of Hormuz and by targeting U.S. military bases in the region.
“Iran’s been given every opportunity to negotiate, to show that they’re reasonable on the Strait of Hormuz – but if they’re going to shoot at commercial shipping, then we’re going to hit them…ten times harder. Every night, we’re degrading them further and further,” U.S. Secretary of War Pete Hegseth told reporters at the Oval Office on Tuesday.
At the same event, President Donald Trump said Iran “desperately” wanted to meet, but “until they’re ready to meet in a meaningful way, we have no interest.” The U.S. leader reiterated that Iran could not have a nuclear weapon, adding “any site where they’re even thinking about nuclear – we’ll be hitting it very, very powerfully.”
Meanwhile, a declaration of a maritime embargo against Saudi Arabia by Iran-backed Houthis has added a threat of more supply disruptions to oil flows through the Red Sea.
Against this backdrop, oil prices rose, with , the global oil benchmark, last up 2.3% to $91.24 a barrel. With oil elevated again and reigniting inflationary concerns, precious metal market participants remain wary of Federal Reserve interest rate hikes. This is despite economic data last week showing an easing in U.S. price pressures in June.
According to the CME FedWatch tool, markets largely expect the central bank to hold interest rates steady at the end of this month, though those odds have slipped to about 76% from around 84% the previous day. The odds for a quarter-point rate hike at the Fed’s September meeting stand at nearly 55%.
Higher rate environments tend to weigh on non-yielding assets such as gold. They also tend to strengthen the dollar, which in turn puts pressure on bullion as it makes the yellow metal more expensive for foreign buyers.
“Higher real-rate expectations have pressured gold, while visible investment flows remain inconsistent. This environment is likely to persist in the near term, requiring investors to adopt a longer-term perspective when considering gold exposure,” Dominic Schnider, head of global FX and commodity at UBS Global Wealth Management, said.
Beyond gold, added 4.3% to $58.8375/oz, while gained 1.6% to $1,628.90/oz.
Roushni Nair, Scott Kanowsky, and Jaiveer Shekhawat contributed to this article