Gold struggles to hold gains amid mixed US-Iran headlines, hawkish Fed

Gold (XAU/USD) starts the week on a positive note, buoyed by a potential de-escalation in US-Iran tensions and a weaker US Dollar. President Donald Trump announced the cancellation of a planned strike on Iran, sparking optimism about a possible peace deal. This development sent Oil prices sharply lower, easing inflation concerns and giving support to Gold.

However, the situation remains uncertain, as Iran's Foreign Ministry spokesperson, Esmaeil Baghaei, stated that Tehran is not currently holding talks with Washington, which keeps traders skeptical about the chances of a deal and the full reopening of the Strait of Hormuz. Traders continue to view a high likelihood of the Fed raising interest rates this year, despite the broad weakness in the USD, driven by Japanese intervention to support the Yen.

The CME FedWatch Tool shows a 65% chance of a rate hike in September, which continues to cap Gold's upside despite the overall strength of the precious metal as a safe-haven asset.

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