Gold rebounded as the US Dollar eased after reports of a possible US-Iran extension of the current truce and softer inflation data. XAU\/USD traded near $4,480 after an intraday low of $4,366, the weakest level in two months. Axios said a preliminary 60-day arrangement had been reached but was awaiting approval from President Donald Trump, following a second US \u201cdefensive\u201d strike this week on Iranian facilities and an IRGC claim of retaliatory targeting of a US Gulf airbase. The Dollar\u2019s pullback left DXY around 99.00 after an earlier seven-week high of 99.54.<\/p>\n
Core PCE rose 0.2% MoM in April, slowing from 0.3% in March, while the annual rate edged up to 3.3% from 3.2%. Diplomatic talks continued to face obstacles over Iran\u2019s nuclear programme and the Strait of Hormuz, while Tehran sought sanctions relief and access to frozen assets; Trump said no relief would be offered for giving up highly enriched uranium. Gold also drew pressure from elevated US Treasury yields as higher energy costs sustained inflation concerns; Fed Vice Chair Philip Jefferson cited energy prices as a risk to growth and inflation, and reiterated a 2% target, calling activity \u201crobust\u201d. Technically, XAU\/USD bounced off the 200-day SMA at $4,399, with RSI near 40 and MACD negative; resistance sits at the 50-day SMA near $4,630 and the 100-day at $4,801.<\/p>\n
Given the Federal Reserve’s firm stance on inflation, we believe gold’s potential for a major rally is limited in the near term. With the Fed Funds Rate still holding firm above 4.5% and Core PCE at 3.3%, conditions are not yet in place for a significant policy shift. The CME FedWatch Tool is currently pricing in less than a 20% chance of a rate cut by the September 2026 meeting, which should continue to support the US Dollar.<\/p>\n
The developing situation between the US and Iran introduces significant headline risk and a potential for sharp, unpredictable moves. A breakdown in the truce talks could send gold higher as a crisis hedge, a scenario for which we must be prepared. Historically, military escalations in the Strait of Hormuz have led to oil price spikes of over 10% in a matter of days, which would have inflationary knock-on effects and create flight-to-safety flows.<\/p>\n
For now, our base case is that gold remains capped, making selling premium an attractive strategy. We are considering initiating bear call spreads, targeting strikes above the 50-day moving average near $4,630 to capitalize on the bearish technical outlook. This defined-risk strategy allows us to profit if gold trades sideways or drifts lower in the coming weeks.<\/p>\n
At the same time, we see value in purchasing some cheap, out-of-the-money call options with July or August expirations as a low-cost hedge against a sudden geopolitical flare-up. The potential for the truce to fail is a real, if unquantifiable, risk that could quickly invalidate the current bearish trend. This approach allows us to maintain a core bearish position while protecting against a sudden reversal driven by news events.<\/p>\n
The US Dollar’s role as the preferred safe-haven asset remains a key headwind for gold. The dollar’s strength is reinforced by recent global PMI data, which showed manufacturing activity in both Europe and China contracting for a third consecutive month. This economic divergence, with the US economy remaining relatively robust, will likely continue to attract capital flows into dollar-denominated assets, further weighing on gold prices.<\/p>\n","protected":false},"excerpt":{"rendered":"
Gold rebounded as the dollar eased on softer inflation and US-Iran truce extension hopes; upside limited.<\/p>\n","protected":false},"author":103,"featured_media":16976,"comment_status":"","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[59],"tags":[9,6,100,66,81],"class_list":["post-54195","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-live-updates","tag-dollar","tag-gold","tag-inflation","tag-oil","tag-usd"],"acf":{"acf_article_selection_author":null},"aioseo_notices":[],"_links":{"self":[{"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/posts\/54195","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/users\/103"}],"replies":[{"embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/comments?post=54195"}],"version-history":[{"count":0,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/posts\/54195\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/media\/16976"}],"wp:attachment":[{"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/media?parent=54195"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/categories?post=54195"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/tags?post=54195"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}