Gold Outlook: Geopolitical Deadlock Caps Trend, Two Key Risks in Focus

Over the past week, gold prices edged slightly lower, but overall remain within the consolidation range formed since early April. The repeated swings in geopolitical headlines continue to be the key driver of short-term volatility, leaving prices largely event-driven and lacking a clear directional trend.

This week, while markets continue to monitor US–Iran negotiations, attention will also turn to several central bank meetings, including the Federal Reserve. Any marginal shift in geopolitical developments or policy tone could act as a key catalyst for gold’s next directional move.

Technical Observation: Gold Softens in Range, $4,660 as Key Support

From a daily XAUUSD structure perspective, the market remains in a consolidation phase with two-sided positioning, though short-term momentum is slightly tilted to the downside. Last week, gold ended its four-week winning streak, and this week has extended its gap-down opening, indicating that upside pressure is gradually building and near-term downside risks remain present.

However, in terms of actual price action, the market has not shown a one-way bearish structure. The early-session gap has been filled, and price has repeatedly found support around the $4,660 level. This area appears more like a re-pricing equilibrium zone between bulls and bears rather than a structural breakdown level, with some participants still viewing pullbacks as opportunities for tactical positioning.

That said, if $4,660 is broken decisively on a daily closing basis, sentiment could shift more materially, with downside momentum likely to strengthen. Key supports below are seen at $4,600 and $4,550.

Conversely, if price stabilises at this level and extends higher, resistance levels are seen at $4,770, $4,800, and the $4,850–$4,900 region.

US–Iran Standoff Continues, Gold Lacks Direction

Over the weekend, highly anticipated US–Iran talks failed to proceed as expected. However, early this week, Iran’s proposed three-stage framework briefly revived expectations for negotiations, supporting a mild short-term bounce in gold.

At present, Iran continues to insist on preconditions including lifting port blockades, ending hostilities, and securing safety guarantees, before moving on to discussions around the management of the Strait of Hormuz and nuclear issues. Meanwhile, the US still maintains the option of communication and “phone diplomacy,” but has shown no meaningful concession on core nuclear-related issues.

As a result, despite short-term fluctuations in sentiment driven by headlines, the divergence in core positions remains clear, and the probability of a near-term breakthrough in US–Iran negotiations appears limited.

Against this backdrop, markets remain in a phase of repeated repricing driven by news flow. The geopolitical standoff continues to support inflation expectations to some extent, while sustained central bank gold buying provides medium-term support. In the absence of meaningful progress, gold is likely to remain in a range-bound structure.

Geopolitics: Potential Developments Shape Gold Price Action

Overall, in the absence of substantive progress in geopolitical conflicts, gold continues to trade within a range. This week, market attention is concentrated on two key themes: marginal shifts in geopolitical dynamics and further guidance on global central bank policy paths. Both could serve as important drivers of near-term price direction.

On the geopolitical front, the base case in markets still leans toward a gradual de-escalation of tensions. From a policy perspective, under the US War Powers framework, there is a requirement for troop withdrawal from overseas by May 1, which to some extent adds to expectations of easing tensions.

If negotiations lead to more concrete arrangements—for example, ensuring more stable and sustained access through the Strait of Hormuz, or even a clearer “path to peace”—then easing inflation expectations could provide a supportive backdrop for gold.

However, tail risks remain. If tail risks materialise and geopolitical tensions escalate unexpectedly, issues such as the security of navigation through the Bab el-Mandeb Strait and undersea cables in the Strait of Hormuz would also become key variables for traders to price in.

In such a scenario, disruptions to energy supply chains combined with potential threats to digital communication infrastructure could significantly amplify gold volatility.

Central Bank Meetings: Rate Expectations Drive USD and Gold

The other key focusses this week is a series of central bank meetings. While markets broadly expect policy rates to remain unchanged, the key driver will be forward guidance on the future rate path.

For the Fed in particular, current inflation and retail sales data continue to support a wait-and-see approach. If Powell delivers a more hawkish message—emphasising inflation stickiness, pushing back rate cut expectations beyond September, and reinforcing a “higher for longer” stance—gold could face short-term pressure.

Conversely, a more dovish tone acknowledging economic slowdown risks could trigger renewed safe-haven inflows and support gold prices. A neutral stance would likely leave gold trading within its current range.

Meanwhile, markets are also gradually pricing in the rate hike trajectories of the European Central Bank and the Bank of Japan. If these central banks deliver clearer signals of tightening relative to the Fed, this could weigh on the USD to some extent, providing indirect support for gold.