Gold rose 0.35% on Tuesday to $4,026 after touching an eight-month low of $3,942, yet it is still set for a monthly decline of more than 11%. The metal has slid from June peaks near $4,500 towards $4,000, with broader US Dollar strength keeping downward pressure on XAU/USD.
Price action followed the June disruption linked to the US-Iran war, which lifted Oil and supported the Dollar, even after an MOU to end the conflict helped Oil ease. The US Dollar Index was up 0.07% at 101.17, while the US 10-year Treasury yield rose 3.5 basis points to 4.412%, as money markets priced 35 basis points of Federal Reserve tightening by December 2026 and looked for no July move, per Prime Terminal. On data, JOLTS job openings rose to 7.594 million in May versus forecasts of 7.3 million and April’s revised 7.585 million, while Consumer Confidence improved in June. Technically, resistance is cited at $4,100, then $4,220 and $4,280-$4,300, with the 50-day SMA at $4,439; supports sit at $3,941, $3,900, $3,886 and $3,500.
Dominance Of The US Dollar And Fed Policy Outlook
The massive 11% drop in gold last month shows that the US Dollar is in control. We see this trend continuing as the market focuses on potential Federal Reserve rate hikes. Any geopolitical risk from the fragile US-Iran truce seems to be boosting the dollar, not gold.
Today’s ADP jobs report, coming in stronger than expected at 210,000, reinforces the case for a hawkish Fed. With the latest Core PCE inflation data holding firm at 3.1%, we believe the central bank has a clear mandate to tighten policy further. This fundamental backdrop will likely keep a lid on any gold rallies.
Positioning And Outlook For Further Downside
We are positioning for further downside by buying put options with strike prices below $3,900. Open interest data from the exchanges shows a recent surge in puts targeting the $3,800 and even $3,500 levels for the August expiry. Selling out-of-the-money calls above the $4,220 resistance level could also be a viable strategy to collect premium.
This environment is reminiscent of the early 1980s, when a strong dollar and high interest rates created sustained pressure on gold prices. We are closely watching Thursday’s Nonfarm Payrolls report, as a strong number could be the catalyst for the next leg down. A sustained break above $4,100 would force us to reconsider this bearish outlook.
