On Tuesday, declined to a three-week low as the US dollar strengthened and elevated threatened to disrupt global economic growth for an extended period. This movement followed media reports indicating that U.S. President Donald Trump expressed dissatisfaction with Iran’s latest proposal to end the two-month conflict and reopen the Strait of Hormuz.
Tehran proposed delaying negotiations over its nuclear program, although Trump has stated that eliminating these ambitions was a central reason for initiating his joint campaign with Israel in late February.
The impasse means that, for now, the Strait of Hormuz will remain largely closed to shipping traffic, further adding upward pressure on oil prices.
I observe that the jump in oil prices will, in turn, fuel a surge in inflation, prompting central banks to consider interest rate hikes. This may not bode well for bullion, which tends to perform poorly in high-rate environments.
Undoubtedly, central banks are set to announce new rate decisions this week, possibly offering insight into how the oil price spike could affect borrowing costs across countries worldwide.
The left interest rates unchanged on Tuesday but warned of cooling economic growth and rising inflation due to the impact of the war in the Middle East. As widely expected, the BOJ kept its short-term policy rate at 0.75%.
Later this week, , the , and the will announce new rate decisions.
On evaluating the movements of gold futures across different chart patterns, I observe that gold futures have already entered a “no return zone” on Tuesday, exactly as discussed in my previous analysis last Saturday.
Undoubtedly, fear has intensified due to elevated oil prices, while declining hopes for a revival in peace negotiations between the U.S. and Iran were dented over the weekend, when Trump called off sending his negotiators to Pakistan for a fresh round of talks.
On Tuesday, recent CNN reports stated that the United Arab Emirates will withdraw from the Organization of the Petroleum Exporting Countries (OPEC) this week, as Iran roils global energy markets. climbed above $105.81 a barrel for the first time in three weeks today.
However, U.S. President Donald Trump does not appear open to Iran’s proposal to end the war. The proposal would reopen the Strait of Hormuz but raises questions about Tehran’s nuclear program for future negotiations.
On the other hand, the Israeli military has warned residents in more than a dozen villages to evacuate northward after claiming that Hezbollah “violated” the ceasefire. Israeli forces and Hezbollah have continued to exchange strikes, with each side accusing the other of breaking the truce.
Undoubtedly, the truce between the US and Iran appears to be heading toward a decisive war, as the disruptive impact of elevated energy prices seems strong enough to reshape the global order. Russia and China appear likely to intervene in this ongoing conflict, applying their preferred strategies—whether diplomatic or aggressive—to reopen the Strait of Hormuz as soon as possible.
Under such a geopolitical scenario, gold futures could retest the low levels seen in May 2025, as the situation appears severe enough to extend bearish pressure. The delay in de-escalation could heighten inflationary fears to unexpected levels, potentially disrupting global growth for a longer period.
Technical Levels to Watch
In a monthly chart, gold futures, after starting this month at $4,698.40, tested a high of $4,917.70 and a low of $4,567.75, and are trading at $4,585. They appear ready to test immediate support at the 9 EMA ($4,366), as they struggle to hold the immediate support at $4,584.
In a weekly chart, gold futures, after opening this week at $4,713.10, tested a high of $4,745.80 and a low of $4,367.75, and are trading at $4,578, just below the significant support at $4,625.93. They appear ready to test immediate support at $4,400 this week, where a breakdown could push futures toward the next significant support at the 50 EMA ($4,206), as a bearish crossover is forming, with the 9 EMA piercing the 20 EMA. Gold futures are already trading well below the 20 EMA and have maintained a consistent 54-degree downward slope over the past three weeks.
In a daily chart, gold futures, after opening the day at $4,707.74, tested a high of $4,716.35 and a low of $4,567.75, and are trading at $4,582, indicating significant weakness as they have pierced the key support at the 100 EMA ($4,655.83) in today’s session. They appear ready to test the next significant support at the 200 EMA ($4,201.63) before the close of this week.
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Disclaimer: Readers are advised to take any position in gold at their own risk, as this analysis is based only on observations.