Gold (XAU/USD) declined on Thursday, breaking a two-day winning streak, as uncertainty surrounding US-Iran negotiations and expectations for prolonged elevated global interest rates weighed on the precious metal [1]. At the time of writing, XAU/USD traded around $4,444, marking a 1.38% drop for the day and retreating from Wednesday’s high near $4,602 [1]. The ongoing US-Iran talks remain unresolved, with Iran rejecting a proposed 15-point plan and demanding security guarantees and recognition of its authority over the Strait of Hormuz before any agreement is reached [1]. This refusal has heightened the risk of a prolonged conflict, especially as reports indicate additional US troop deployments to the region and US President Donald Trump’s five-day pause on planned strikes is set to end later this week [1]. Trump stated in a Truth Social post that Iranian negotiators were “begging” for a deal and warned of “no turning back” if a diplomatic resolution is not achieved [1].
Despite these geopolitical tensions, Gold has failed to attract sustained demand, currently down over 15% from its March peak of $5,419, after briefly falling more than 20% from that high earlier this week [1]. Analysts attribute this weakness to traders selling Gold in favor of cash, particularly US Dollars, to cover losses or margin calls in other assets amid heightened market volatility [1]. Rising Oil prices are fueling inflation concerns, leading to expectations that central banks may keep interest rates elevated for longer or even tighten further if price pressures persist [1]. This has resulted in a repricing of Federal Reserve expectations, with markets now anticipating rates to remain on hold through 2026, instead of previous forecasts for at least two cuts [1]. The shift has pushed US Treasury yields higher, further limiting Gold’s upside [1].
Technical analysis indicates a bearish bias for XAU/USD, as the metal faced rejection at the 100-day Simple Moving Average (SMA) on the daily chart [1]. Looking forward, traders are expected to closely monitor geopolitical developments for signs of progress in US-Iran negotiations, but upside for Gold is likely to remain capped unless a breakthrough leads to lower Oil prices and eases expectations for higher-for-longer interest rates [1].
CONCLUSION
Gold's decline reflects heightened geopolitical uncertainty and a shift toward higher global interest rate expectations, with traders favoring liquidity over the precious metal. Unless US-Iran tensions ease and inflation concerns subside, Gold's upside is expected to remain limited. The market is likely to remain cautious, awaiting further developments in both geopolitical and monetary policy fronts.