Gold prices edged higher during Tuesday's Asian session after experiencing volatile two-way price action in the previous session. However, the precious metal struggled to build on its recovery, remaining below the $4,050 per troy ounce mark as investors balanced safe-haven demand against expectations that the Federal Reserve will keep interest rates higher for longer.
Despite the ongoing exchange of military strikes between the United States and Iran, diplomatic optimism helped limit further gains in gold. U.S. Secretary of State Marco Rubio stated on Sunday that Washington remains open to negotiations with Tehran, keeping hopes alive for a potential diplomatic resolution to the conflict.
Gold Technical Outlook Remains Bearish Below Key Moving Averages
On the daily chart, XAU/USD traded around $4,046.08, remaining below all major moving averages and reinforcing the short-term bearish outlook.
The 21-day Simple Moving Average (SMA) at $4,063.52 serves as the nearest resistance level, while the 50-day SMA at $4,263.77 represents the next significant upside barrier.
Long-term trend indicators continue to favor sellers, with the 200-day SMA at $4,495.83 and the 100-day SMA at $4,510.55 positioned well above current prices. Meanwhile, the 14-day Relative Strength Index (RSI) hovers near 44, indicating only modest corrective momentum rather than a decisive bullish reversal.
Adding to the negative technical outlook, the 100-day SMA is on the verge of crossing below the 200-day SMA. If confirmed by a daily close, the formation would complete a Bear Cross, a classic bearish signal suggesting that downside risks remain dominant.
Resistance and Support Levels to Watch
A sustained move above the 21-day SMA at $4,063.52 would be the first indication that bearish momentum is fading, exposing the next resistance around the 50-day SMA at $4,263.77.
Beyond that, the 200-day SMA ($4,495.83) and 100-day SMA ($4,510.55) create a strong resistance zone that is likely to limit any broader recovery in the near term.
On the downside, the absence of major technical support immediately below current prices leaves recent swing lows as the primary support area. As long as gold remains below the 21-day SMA, rallies are likely to attract fresh selling pressure.
Falling Oil Prices Ease Inflation Concerns
Gold also found support from the continued pullback in crude oil prices after they retreated from monthly highs near $84.50 per barrel. Oil declined for a second consecutive session as diplomatic efforts to ease tensions between the United States and Iran gained momentum.
An Iranian Foreign Ministry spokesperson confirmed on Monday that international mediators had presented new proposals to Tehran, keeping hopes for diplomacy alive.
Meanwhile, U.S. Secretary of State Marco Rubio told CNN that Washington had received signals through multiple channels indicating Iran's willingness to negotiate, although divisions within the Iranian leadership remain.
The diplomatic developments come despite ongoing military exchanges between the two countries. At the same time, Iran-backed Houthi forces in Yemen announced a maritime blockade targeting Saudi Arabia after both sides exchanged attacks for the first time in several years.
Additional support for gold sentiment came after an Axios report suggested that President Donald Trump is weighing two strategic options: supporting a 10-day ceasefire to reopen the Strait of Hormuz or launching a broader joint military campaign with Israel against Iran, while diplomatic negotiations continue.
Market Focus Shifts to Diplomacy and Fed Outlook
For now, investors remain focused on diplomatic efforts, particularly as the Middle East crisis is expected to dominate discussions among foreign ministers from the Association of Southeast Asian Nations (ASEAN) during meetings in Manila, Philippines.
Looking ahead, any developments regarding a potential U.S.-Iran ceasefire are likely to remain the primary catalyst for gold prices, especially as the U.S. economic calendar lacks major high-impact data releases.
Despite geopolitical support, gold's daily technical structure continues to favor the bears. The approaching Bear Cross, combined with persistent negative momentum and expectations for prolonged higher U.S. interest rates, suggests that upside potential may remain limited unless buyers successfully reclaim key resistance levels.