Mideast Tensions, Fed's Hold: Gold's Bearish Turn

Gold declined well below $3400 despite the escalation geopolitical crisis between Iran and Israel. It hits an intraday low of $3347 and is currently trading around $3365.

Both sides have caused significant damage to civilians and military personnel, resulting in an intensified conflict. Additionally, there are ongoing attacks. After rejecting ceasefire negotiations, Iran has stated that it will only commence them after completing their response to Israel's preemptive attacks. US President Donald Trump has emphasized the importance of reaching an agreement for peace, but also acknowledged that it would require significant fighting and negotiation. The situation remains extremely volatile due to ongoing hostilities and no signs of de-escalation, with both militaries cautioning civilian citizens to be cautious in anticipation of future attacks.

In June 2025, for the fourth time in its history, the Federal Reserve continued to hold the federal funds rate at 4.25%-4.5%, showing caution against deflation caused by inflation above 2% and global economic uncertainties, with a high risk of stagflation despite robust job growth and a strong labor force. According to the "dot plot," policymakers are divided on whether rate cuts will occur in 2025 or 2026, with increasing numbers now expecting no cuts and others expected to continue due to risks such as proposed tariffs, geopolitical tensions (trademark instability), and domestic policy debates -- all while maintaining their dual mandate of maximum employment and price stability.

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Rate Hike Bets Cool: Fed Watch Sees Near-Certain June Pause

According to the CME Fed Watch tool, the chances of a rate pause in the Jul 30th 2025 meeting have increased to 89.70% from 75.60 % a week ago.

Technical Analysis: Key Levels and Trading Strategy
 
Gold prices are holding below short-term moving averages, 34 EMA and  55 EMA, and above the long-term moving averages (200 EMA) on the 4-hour chart. Immediate support is at $3340, and a break below this level will drag the yellow metal to $3330/$3300. The near-term resistance is at $3385 with potential price targets at $3400/43420$3450/$3475/$3500/$3550.

It is good to buy on dips around $3350 with a stop-loss at $3330 for a target price of $3450.