Gold pauses near two-month highs as US-Iran standoff drives Oil prices higher

Gold briefly halted its two-month rally near $4,435 on Tuesday, as its price was influenced by oil price fluctuations and the Federal Reserve's interest-rate outlook. The metal was trading around $4,383, after dipping to a low of $4,356. Although oil prices retreated from their intraday gains, it was still up over 5% this week. Qatar reported progress in Iran-Oman negotiations to reopen the Strait of Hormuz, but the situation remained fluid, with Iran insisting on reparations and other demands.

Meanwhile, rising oil prices reignited inflation concerns, prompting some investors to reconsider their Federal Reserve rate hike predictions. Consequently, the US Dollar strengthened, supported by hawkish Fed expectations and elevated Treasury yields. These factors created a challenging environment for gold's recovery. Traders seemed to be waiting for US Consumer Price Index (CPI) data on Wednesday for further guidance.

The technical analysis indicated a bullish near-term bias for gold, with price action remaining above key moving averages and Fibonacci retracement levels. However, resistance levels were identified at $4,389 and $4,435. Conversely, support was seen at $4,351, $4,285, and $4,238. Gold's inverse correlation with the US Dollar and risk assets, as well as its role as a safe-haven asset during turbulent times, made its price sensitive to geopolitical events and interest rate expectations.