Gold's sharp selloff paused after reports pointed to possible US concessions to Iran, reviving hopes of de-escalation. Traders now await a formal Iranian response expected Tuesday, with a breakthrough seen supporting gold and a breakdown likely to extend the pressure on the metal.
Gold sold off hard after Trump rejected Iran's proposal to reopen the Strait of Hormuz and said he expected to resume bombing Iran after the midterms. Yet the metal found a floor once positive headlines emerged during the American session, pointing to possible US concessions.
Reports of a deal, then a denial
According to Axios, Trump reportedly offered Iran sanctions relief and access to frozen funds in exchange for progress on its nuclear program. Trump later denied the reports. However, he confirmed that American and Iranian negotiators are engaged in talks through mediators. Iranian Foreign Minister Araghchi said he expected a formal answer on Tuesday to Tehran's proposal to open the Strait of Hormuz.
The focus therefore stays on US-Iran headlines. A breakthrough would likely support gold in the short term as aggressive rate hike bets get pared back, while a negative outcome would likely keep weighing on the precious metal.
Chart levels traders are watching
On the daily chart, gold collapsed after Trump rejected the Hormuz proposal over the weekend. The next natural target is the 3,885 level, where a major upward trendline also sits. If price reaches that zone, buyers may step in with defined risk below the trendline to position for a rally into new record highs. Sellers, on the other hand, will look for a break to extend the drop toward the 3,500 level.
On the 4-hour chart, a downward trendline defines the bearish structure, with sellers leaning on pullbacks toward it while still targeting the 3,885 level. Buyers, meanwhile, want to see a break higher to position for a correction toward the 4,500 level next.
Data on deck this week
Today brings the US Consumer Confidence report and Job Openings data. Tomorrow follows with the US ADP report and the PCE price index. Thursday brings the ISM Manufacturing PMI and jobless claims figures, and the week closes with the US NFP report on Friday. Still, the focus will remain mostly on US-Iran developments.
Source: Investinglive RSS Breaking News Feed
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