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Gold (XAUUSD) slipped as President Trump's announcement of a ceasefire between Israel and Iran eased geopolitical tensions. This reduced demand for gold as a safe-haven asset. However, uncertainty lingers due to reports of renewed Israeli attacks and Iranian warnings. At the same time, the US dollar remains under pressure from dovish Fed commentary and weak economic signals. Market focus now shifts to upcoming US data and Fed Chair Powell's testimony, both of which could influence gold's next move.
 

Israel-Iran Ceasefire Slows Gold Demand amid Lingering Tensions

President Trump's announcement of a ceasefire deal between Israel and Iran provided a temporary lift to investor confidence. This reduced the demand for gold as a risk-off hedge. However, tensions remain beneath the surface. Reports indicate Israel may have launched new attacks, while Iran warned it would respond if Israel did not halt its aggression. This lingering uncertainty keeps gold from falling too sharply.

Meanwhile, the US Dollar faces pressure for the second consecutive day. Dovish commentary from Fed officials, combined with ongoing concerns about the fiscal outlook, weighs on the greenback. Uncertainty surrounding trade policy further adds to the pressure. These factors act as a counterbalance to gold's decline by supporting its price to some extent. Economic data also played a role. While the manufacturing PMI remained steady at 52, the services PMI declined slightly, resulting in a downward shift in the composite index. These figures indicate a mild slowdown in US economic activity, which, paired with dovish Fed sentiment, raises expectations of a rate cut as early as July.

Fed Governor Michelle Bowman's remarks added fuel to this speculation. She expressed concern about labor market risks and indicated that the time to cut interest rates may be approaching. Her views echo those of Fed Governor Christopher Waller, who suggested that the central bank may ease policy during the July 29–30 meeting.

Market participants now await fresh cues from today's US economic releases, including key indicators that could influence the financial outlook and policy expectations. However, the main event will be Fed Chair Jerome Powell's testimony before Congress. His statements could offer vital signals on the path of interest rates and significantly impact the gold market.
 

Technical Analysis: Gold Retests Key Support After Inverse Head-and-Shoulders Breakout

The gold chart below shows a well-defined inverse head-and-shoulders pattern that formed between April and June. This bullish reversal pattern generally indicates upward momentum once the price breaks above the neckline. Indeed, gold broke above the key resistance zone near $3,380 and rallied sharply.

However, current price action shows a retest of this breakout zone. After reaching highs near $3,440, gold failed to maintain momentum and slipped back toward the neckline area. This area, marked as "Key" on the chart, now acts as a critical support level.

(Click on image to enlarge)

If gold holds above this key level, the breakout remains valid, and price could rebound toward new highs. A clean bounce from here would reaffirm bullish momentum and may encourage new long positions. Conversely, a decisive break below this zone would invalidate the bullish pattern and could open the door to further downside, potentially reaching $3,260 or even $3,180.

The recent series of bearish candlesticks, coupled with diminishing bullish follow-through, indicates a weakening in market momentum. Traders are likely awaiting confirmation from fundamental triggers, such as Powell's testimony or macro data, before committing to new positions.
 

Conclusion

Gold prices remain under pressure as the market reacts to the Israel-Iran ceasefire and shifting expectations around US monetary policy. While the safe-haven appeal has weakened, persistent softness in the US dollar provides some balance. Technically, gold is at a crucial support level following an inverse head-and-shoulders breakout. The price action in the coming days, particularly after Powell's congressional address, will determine whether gold can regain strength or sink to lower levels. 

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