Gold's selloff pauses as US-Iran talks rekindle deal hopes

Fundamental Overview

Gold declined sharply on Sunday after Trump turned down the Iranian proposal to reopen the Strait of Hormuz over the weekend and stated his intention to resume bombing Iran after the midterms.

The outlook appeared bleak until a series of more optimistic headlines emerged during Tuesday's US trading session, indicating potential compromises from Washington.

Axios reported that Trump had offered sanctions relief and access to frozen Iranian funds for progress on the nuclear program, though the President later contradicted those reports.

He did, however, acknowledge that US and Iranian representatives are communicating via mediators. Foreign Minister Araghchi stated he anticipates an official response on Tuesday to Iran's Strait of Hormuz proposal.

US-Iran developments will thus stay in the spotlight. A diplomatic breakthrough could lift gold prices temporarily as aggressive rate hike expectations recede, while a negative result would probably maintain the downward pressure on the precious metal.

Gold Technical Analysis – Daily Timeframe

Gold (CFD contract) suffered a sharp decline on Sunday following Trump's dismissal of the Iranian Strait of Hormuz proposal over the weekend. Barring other changes, the 3,885 level is the next logical target, which coincides with a key upward trendline. A reach of that level is expected to draw buyers into a defined risk below the trendline, aiming for a rally to new highs. Sellers, by contrast, will try to breach this for a decline toward the 3,500 level.

Gold Technical Analysis – 4 Hour Timeframe

A downward trendline defines the bearish structure. Should the price return to this trendline, sellers are expected to use it as a reference, maintaining a defined risk above it, to continue targeting 3,885. Buyers, conversely, will look for a breakout to the upside, aiming for a correction toward the 4,500 level.

Gold Technical Analysis – 1 Hour Timeframe

The powerful bearish impulse has subsided, with the price action now suggesting a short-term pullback. A counter-trendline marks the beginning of this phase. Buyers are likely to keep leaning on this line, operating with a defined risk below it, to push toward the downward trendline. Sellers, on the other hand, want the price to break lower, allowing them to pile in for a drop toward the 3,885 level.

Upcoming Catalysts

The US Consumer Confidence report and US Job Openings data are due today. The US ADP and US PCE price index follow on Wednesday. Thursday brings the US ISM Manufacturing PMI and the latest US Jobless Claims. The week wraps up with the US NFP report on Friday. US-Iran headlines are still expected to take center stage.