Gold advances on de-escalation hopes from Trump-Gulf meet

Fundamental Overview

Gold continued to rise after the market moved past an overly hawkish reaction to the FOMC meeting. The key takeaway was the forecast of only one additional rate increase. This suggests a limited desire for tightening, in my view.

Going forward, I will closely monitor developments in the Middle East. Oil at $100, rate increases, and higher bond yields could increase pressure on Trump to halt the conflict. A de-escalation phase may already be underway, as Trump has scheduled a meeting with Gulf leaders on Tuesday during the UN General Assembly in New York to talk about future moves in the war with Iran. Of note, the Iranian delegation is permitted to attend.

If de-escalation occurs, oil prices would decline, alleviating worries about inflation and rate hikes, which would eventually benefit gold.

Economic reports will also be an important factor. When market positioning and expectations are extreme, a small change in data can cause a major turnaround. Should US economic figures begin to miss expectations, the outlook for aggressive rate increases would probably be tempered, providing further support for gold.

Gold Technical Analysis – Daily Chart

Gold bounced sharply from the crucial 4,300 support area, with buyers aiming for the swing high near 4,510. Should the price reach that level, sellers are likely to intervene with risk above the swing high, positioning for a decline back to 4,300 support. Conversely, buyers would prefer a breakout to the upside, strengthening bullish positions toward 4,700.

Gold Technical Analysis – 4-Hour Chart

The price is moving above a descending trendline on the 4-hour timeframe. Buyers are expected to enter near current levels with risk below the latest swing low at 4,334, aiming for a push to 4,510. Sellers, meanwhile, require a decline below 4,300 support to become more confident in further losses.

Gold Technical Analysis – 1-Hour Chart

A small ascending trendline on the hourly chart is defining the bullish momentum. In the event of a pullback, buyers are likely to hold the trendline with risk below the 4,334 swing low, aiming for a rise to 4,510. Sellers, on the other hand, are watching for a downside break to begin positioning for a move toward support and new lows.

Upcoming Catalysts

Trump’s meeting with Gulf leaders is scheduled for Tuesday, followed by Flash US PMI data on Wednesday.