Gold (XAU/USD) remains under pressure after pulling back from recent highs, as geopolitical uncertainty and Federal Reserve expectations continue to influence market sentiment. Progress in US-Iran negotiations has reduced safe-haven demand, while firm US economic data and higher rate expectations continue to support the US Dollar. Investors now await fresh geopolitical headlines and key US labor market data for the next directional move in gold.
Gold Pressured by US-Iran Negotiations and Fed Rate Expectations
Gold remains under pressure as investors assess the latest developments surrounding the proposed US-Iran ceasefire extension. Recent comments from US President Donald Trump increased expectations that both sides could reach an agreement to extend the ceasefire and reopen the Strait of Hormuz. These developments have improved market sentiment and reduced demand for traditional safe-haven assets like gold.
However, uncertainty remains elevated across the region. Iranian state media reported that Tehran had suspended message exchanges with Washington despite ongoing diplomatic efforts. Meanwhile, reports indicate that several key issues remain unresolved, preventing a final agreement. These developments suggest that negotiations remain active but uncertain, encouraging cautious market sentiment and supporting demand for the US Dollar.
At the same time, expectations for a restrictive Federal Reserve policy stance continue to weigh on gold. Persistent inflation concerns and elevated energy prices are supporting higher interest rate expectations. Strong US ISM Manufacturing PMI data added to this view after the index increased to 54 in May from 52.7 previously. Investors now await JOLTS Job Openings data and the upcoming Nonfarm Payrolls report, both of which could influence Fed expectations and drive the next move in gold prices.
Gold Tests Rising Support Within Long-Term Ascending Broadening Wedge
The gold chart below shows that price continues to trade within a long-term ascending broadening wedge pattern. This structure has guided the market higher since late 2024, with both support and resistance trendlines expanding over time. Gold advanced strongly within this formation before reaching record highs earlier this year.
Following that rally, gold entered a corrective phase and drifted toward the rising support trendline. Recent price action shows that gold is once again testing this important support area. Previous pullbacks within the pattern found stability near this trendline before resuming higher, making it a key technical level to monitor.
The current test of support comes after a period of consolidation and profit-taking from elevated levels. As long as gold remains above this rising support zone, the broader uptrend remains intact. A successful defense of this area could encourage another recovery toward higher levels inside the wedge. Conversely, a sustained move below support could signal a deeper correction and shift attention toward lower support regions.
Gold Outlook: Key Support and Geopolitical Developments Remain In Focus
Gold continues to face mixed signals from ongoing diplomatic developments and a restrictive Federal Reserve outlook. Progress in US-Iran negotiations has reduced safe-haven demand, while unresolved issues continue to support the US Dollar. Meanwhile, strong US economic data is supporting expectations that the Federal Reserve could keep policy restrictive for longer. From a technical perspective, gold is testing a key support area within its long-term ascending broadening wedge. As long as this support holds, the broader uptrend remains intact despite the recent pullback.
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