Gold (XAU/USD) extended its recovery above the $4,300 mark on Tuesday, trading around $4,340 and up 0.70% on the day, as traders focused on developments in the US-Iran peace framework and the upcoming Federal Reserve (Fed) policy decision [1]. Iran's Foreign Minister Abbas Araghchi warned that any Israeli attack on Lebanon or continued occupation would violate the interim agreement with the US, and announced a new round of US-Iran talks set to begin on Friday, covering Iran's nuclear program, sanctions relief, and the release of frozen Iranian assets [1]. US President Donald Trump described the Lebanon war as a 'minor' conflict and stated the Iran deal could survive, but warned that 'all hell will break out' if Iran seeks a nuclear weapon [1].
According to the second source, President Trump confirmed at the G7 summit that the deal with Tehran is moving to a 'second stage' and that Iran agreed never to have a nuclear weapon. The UK newspaper Guardian, citing Israeli Haaretz, reported the deal includes the release of $24 billion in frozen Iranian assets in exchange for toll-free navigation in Hormuz [2].
Market reaction has been cautious, with a weaker US Dollar and easing oil prices supporting gold for a fourth consecutive day, though investors are hesitant to make aggressive moves before the final agreement is signed on Friday [1]. The pullback in oil prices has helped calm inflation fears, potentially reducing pressure on the Fed to keep rates higher for longer [1]. Technical analysis shows gold remains below its 200-day and 100-day SMAs, with the RSI at 44 and the MACD histogram negative, indicating that while downside momentum is easing, the broader bearish bias persists [1].
In currency markets, the US Dollar posted marginal losses against the Swiss Franc (USD/CHF), trading at 0.7946 with a mildly bearish near-term bias. Technicals suggest a Head & Shoulders pattern is in progress, with key support at 0.7930 and resistance between 0.7960 and 0.7970 [2]. The USD's rally is subdued by optimism over the US-Iran deal and investor caution ahead of the Fed meeting, which will be the first under Chairman Kevin Warsh, who is expected to be more dovish than his predecessor Jerome Powell [2].
Analyst Christopher Wong at OCBC commented that for gold to regain stronger upside momentum, a more durable improvement in the external environment is needed, including softer oil prices, lower yields, and clearer evidence that Fed hawkish repricing has peaked [1].
CONCLUSION
Markets are in a holding pattern as traders await the outcome of US-Iran negotiations and the Fed's policy decision. Gold is supported by a weaker USD and easing oil prices, but technicals remain bearish. The USD is under mild pressure, particularly against the Swiss Franc, as optimism about a peace deal and expectations of a dovish Fed weigh on the currency.