Gold has pulled back after failing to break above the $4,435 resistance level for a second time, as tensions in the Middle East and uncertainty over US interest rates keep the precious metal in a tight range. The retreat follows a strong recovery from near $4,000, driven by a weaker US dollar and a flattening of the Federal Reserve's implied rate path. Investors now await the Fed's July meeting minutes, due Wednesday, for clues on whether policymakers are in a hurry to raise rates.
Middle East tensions cap gains
Geopolitical risks remain elevated. US President Donald Trump escalated his rhetoric on Monday, threatening to strike Oman if the country obstructs negotiations with Iran over reopening the Strait of Hormuz. The strait remains a flashpoint, with tensions between the US and Iran keeping oil prices supported. West Texas Intermediate crude oil closed above $85 per barrel for the first time since July 31, though the move has not significantly revived inflation fears, according to Fed funds futures pricing.
Fed rate expectations shift
Following a disappointing July non-farm payrolls report, soft inflation data, and weak retail sales, markets now assign only a 35% chance of a rate hike at the Fed's September meeting. Traders are pricing in just 40 basis points of rate increases by the end of 2027. This dovish repricing has supported gold, as lower interest rates reduce the opportunity cost of holding the non-yielding metal.
Technical levels to watch
Gold has struggled to overcome the $4,435 area. If bulls can take control above the $4,345 zone this week, they could target $4,500. A break above that would open the door to $4,600, the high from May 29. On the downside, a significant escalation in the Middle East that revives September rate hike expectations could push gold below $4,345. A move below that level could see the precious metal slide to $4,200, the inside swing high from July 6.
Key takeaways
- Gold pulls back after failing to break $4,435 resistance, with Middle East tensions capping upside.
- Fed rate hike odds for September stand at 35% after soft US data, supporting gold.
- Wednesday's Fed minutes could trigger a breakout if they signal policymakers are in no rush to raise rates.
- Key support at $4,345 and $4,200; resistance at $4,435, $4,500, and $4,600.
Common questions
Why is gold struggling to break $4,435?
Gold has been rejected at $4,435 twice recently, as a mix of geopolitical tensions and uncertainty over the Fed's next move keeps the metal range-bound. The level acts as a temporary ceiling until a catalyst—such as the Fed minutes—provides direction.
What could push gold above $4,435?
Less hawkish-than-expected Fed minutes, which would reduce the probability of a September rate hike, could help gold break higher. A sustained move above $4,345 would also signal bullish momentum.
What could send gold lower?
A significant escalation in the Middle East that revives inflation fears and rate hike expectations could push gold below $4,345. A break of that support could lead to a decline toward $4,200.
Gold remains sensitive to both geopolitical developments and Fed policy expectations. Traders can track the latest moves on our live gold price page.