Gold price (XAU/USD) trades 0.85% lower to near $4,530 during the European trading session on Tuesday. The precious metal faces selling pressure amid growing concerns over the longevity of the ceasefire in the Middle East.
During the day, Iran’s Islamic Revolutionary Guard Corps (IRGC) reported that it identified hostile aircraft entering its airspace and intercepted an MQ-9 drone.
On Monday, the Iranian state media also reported that explosions had been heard in the Iranian city of Bandar Abbas for reasons that remain unclear, which were described as “self-defense” by the United States (US) Central Command.
Theoretically, escalating geopolitical tensions improve the appeal of safe-haven assets, such as Gold; however, it is under pressure due to the oil price recovery, in the wake of Middle East uncertainty, which has already prompted US inflation and eradicated hopes of interest rate cuts by the Federal Reserve (Fed) for the year.
According to the CME FedWatch tool, the odds of the Fed holding interest rates at their current levels this year are 43.5%, while the rest are in favor of at least one interest rate hike this year.
Gold technical analysis
XAU/USD trades lower at around $4,530, holding a bearish near-term bias, as spot remains below the 20-day Exponential Moving Average (EMA) at $4,601.20.
The Relative Strength Index (RSI) wobbles inside the 40.00-60.00 zone for a longer period, demonstrating indecisiveness among investors.
On the topside, immediate resistance is defined by the 20-day EMA at $4,601.20, and a daily close above this barrier would be needed to ease the current bearish tone and open the way for a more sustained recovery towards the May 12 high at $4,773.60. Looking down, the Gold price could slide towards the March 26 low at $4,351.23 if it declines below the May 20 low at $4,453.72.
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