Gold's rebound is limited: Easing geopolitical risks and expectations of interest rate hikes are pulling in opposite directions.
2026-06-04 16:42:22
Gold prices rose on Thursday (June 4), currently trading above $4,460 per ounce. The rebound in gold prices was mainly driven by news of an Israel-Lebanon ceasefire, which pressured the safe-haven dollar. However, the ongoing US-Iran standoff and persistent geopolitical risk premiums limited further downside for the dollar. Meanwhile, expectations of a Federal Reserve rate hike further supported the dollar, potentially limiting the upside potential of this non-interest-bearing commodity.
Israel and Lebanon agreed to a ceasefire on Wednesday following U.S.-led talks in Washington. A joint statement said the ceasefire was contingent on Hezbollah, the Iranian-backed group, completely ceasing its attacks and withdrawing its militants from southern Lebanon.
Meanwhile, the U.S. House of Representatives passed a resolution seeking to block President Trump from taking further military action against Iran.
These developments boosted hopes for an end to the three-month-long US-Israeli war against Iran, prompting a modest pullback in the dollar after a strong overnight rally to its highest level since April 7, thus providing support for gold prices to rebound from a one-week low. However, uncertainty remains regarding the implementation of the ceasefire agreement, and the improvement in market sentiment may be temporary.
According to media reports, diplomatic contacts between the US and Iran have encountered obstacles as Iran insists on immediately unfreezing funds at the beginning of negotiations.
Senior U.S. officials have firmly stated that no funds will be unfrozen initially until Iran takes substantive action on its nuclear program and the right of passage through the Strait of Hormuz. This stalemate has limited the latest market optimism, and the persistent geopolitical risk premium has restricted further downside for the dollar.
Furthermore, coupled with market expectations of a hawkish stance from the Federal Reserve, dollar bears dared not make large bets, thus limiting the potential for further increases in gold prices.
Gold faces dual pressures: the ongoing US-Iran conflict has not triggered large-scale safe-haven buying, while expectations of interest rate hikes continue to suppress the attractiveness of non-interest-bearing assets. Currently, gold prices are still far below the psychological level of $4,500.
Traders are focused on the release of U.S. weekly initial jobless claims data and FOMC member speeches later in the North American session. An unexpected rise in initial claims or dovish signals from officials could weaken expectations of a Fed rate hike, providing support for gold; conversely, a weaker figure would benefit the dollar and suppress gold prices.
However, market focus remains on Friday's non-farm payroll report, which will provide clearer clues about the Federal Reserve's policy path. Strong data will reinforce expectations of an interest rate hike, which would be bearish for gold; weaker-than-expected data could trigger a dollar pullback and boost gold prices.
In addition, the latest geopolitical developments (such as US-Iran negotiations and the progress of the ceasefire) may continue to cause market volatility, becoming an additional variable driving the short-term trends of the US dollar and gold.
Spot gold previously surged to a high of $5596.33 on the daily chart before entering a pullback and consolidation phase, currently trading around $4460. It is below the short-term 20-day and 50-day moving averages, finding support at the 200-day moving average (4422.53), a medium-to-long-term moving average. Short-term resistance is seen in the $4556-$4628 range, with key resistance at $4691. Support levels are the previous low of $4366.52 and the 200-day moving average. The overall trend remains in a high-level consolidation pattern after an initial upward move.
The MACD lines are running below the zero axis with a small green bar, indicating short-term weakness but without sustained downward volume. The RSI value is 42.32, which is in the neutral range and has not triggered oversold conditions. The market is expected to maintain a weak and volatile trend in the short term. It needs to stabilize above the short-term moving average to reverse the rebound. A break below the MA200 would open up further downside potential.
(Spot gold daily chart, source: FX678)
At 15:48 Beijing time on June 4, spot gold was trading at $4431.60.
Ceasefire agreement boosts gold
Israel and Lebanon agreed to a ceasefire on Wednesday following U.S.-led talks in Washington. A joint statement said the ceasefire was contingent on Hezbollah, the Iranian-backed group, completely ceasing its attacks and withdrawing its militants from southern Lebanon.
Meanwhile, the U.S. House of Representatives passed a resolution seeking to block President Trump from taking further military action against Iran.
These developments boosted hopes for an end to the three-month-long US-Israeli war against Iran, prompting a modest pullback in the dollar after a strong overnight rally to its highest level since April 7, thus providing support for gold prices to rebound from a one-week low. However, uncertainty remains regarding the implementation of the ceasefire agreement, and the improvement in market sentiment may be temporary.
US-Iran negotiations stalled, geopolitical risks persist.
According to media reports, diplomatic contacts between the US and Iran have encountered obstacles as Iran insists on immediately unfreezing funds at the beginning of negotiations.
Senior U.S. officials have firmly stated that no funds will be unfrozen initially until Iran takes substantive action on its nuclear program and the right of passage through the Strait of Hormuz. This stalemate has limited the latest market optimism, and the persistent geopolitical risk premium has restricted further downside for the dollar.
Furthermore, coupled with market expectations of a hawkish stance from the Federal Reserve, dollar bears dared not make large bets, thus limiting the potential for further increases in gold prices.
Gold faces dual pressures: the ongoing US-Iran conflict has not triggered large-scale safe-haven buying, while expectations of interest rate hikes continue to suppress the attractiveness of non-interest-bearing assets. Currently, gold prices are still far below the psychological level of $4,500.
Market focus shifts to employment data and speeches by Federal Reserve officials.
Traders are focused on the release of U.S. weekly initial jobless claims data and FOMC member speeches later in the North American session. An unexpected rise in initial claims or dovish signals from officials could weaken expectations of a Fed rate hike, providing support for gold; conversely, a weaker figure would benefit the dollar and suppress gold prices.
However, market focus remains on Friday's non-farm payroll report, which will provide clearer clues about the Federal Reserve's policy path. Strong data will reinforce expectations of an interest rate hike, which would be bearish for gold; weaker-than-expected data could trigger a dollar pullback and boost gold prices.
In addition, the latest geopolitical developments (such as US-Iran negotiations and the progress of the ceasefire) may continue to cause market volatility, becoming an additional variable driving the short-term trends of the US dollar and gold.
Technical Analysis
Spot gold previously surged to a high of $5596.33 on the daily chart before entering a pullback and consolidation phase, currently trading around $4460. It is below the short-term 20-day and 50-day moving averages, finding support at the 200-day moving average (4422.53), a medium-to-long-term moving average. Short-term resistance is seen in the $4556-$4628 range, with key resistance at $4691. Support levels are the previous low of $4366.52 and the 200-day moving average. The overall trend remains in a high-level consolidation pattern after an initial upward move.
The MACD lines are running below the zero axis with a small green bar, indicating short-term weakness but without sustained downward volume. The RSI value is 42.32, which is in the neutral range and has not triggered oversold conditions. The market is expected to maintain a weak and volatile trend in the short term. It needs to stabilize above the short-term moving average to reverse the rebound. A break below the MA200 would open up further downside potential.
(Spot gold daily chart, source: FX678)
At 15:48 Beijing time on June 4, spot gold was trading at $4431.60.
- Risk Warning and Disclaimer
- The market involves risk, and trading may not be suitable for all investors. This article is for reference only and does not constitute personal investment advice, nor does it take into account certain users’ specific investment objectives, financial situation, or other needs. Any investment decisions made based on this information are at your own risk.
