Gold Extends Decline as Diplomacy Between Washington and Tehran Improves

Traders' Opinions

Summary:

Gold slipped toward the $4,050 level as easing geopolitical tensions between the United States and Iran reduced demand for traditional safe-haven assets

SELL XAUUSD

Close Time

CLOSED

4040.00

Entry Price

3800.00

4100.00

3995.93 -20.26 -0.50%

130.9

Pips

Profit

3800.00

4026.91

Exit Price

4040.00

Entry Price

4100.00

Gold prices weakened on Monday, with XAU/USD slipping nearly 1% to trade around the $4,050 mark as improving diplomatic relations between the United States and Iran reduced demand for safe-haven assets. Investor sentiment improved after reports indicated both countries had agreed to pause military activity around the Strait of Hormuz, allowing commercial shipping to resume while negotiations continue.

According to reports, US and Iranian officials are scheduled to resume talks in Doha on Tuesday to discuss outstanding issues under their existing memorandum of understanding. Adding to the optimism, Iranian President Masoud Pezeshkian said that roughly $6 billion of Iranian assets frozen in Qatar should be released, a move widely viewed as a confidence-building measure ahead of the next round of negotiations.

Despite the diplomatic progress, markets remain cautious. Iranian Foreign Minister Abbas Araghchi stressed that Tehran retains full responsibility for the Strait of Hormuz and warned that any attempts to bypass Iran's preferred shipping route could reignite tensions. With nearly 20% of global oil supplies passing through the strategic waterway, investors remain alert to any developments that could disrupt energy markets.

While geopolitical fears have eased, they have not disappeared. Any setback in negotiations could quickly restore demand for traditional safe-haven assets such as gold.

Meanwhile, traders continue to focus on the Federal Reserve's policy outlook. Although easing oil prices have reduced some inflation concerns, markets still expect US interest rates to remain elevated. CME FedWatch data shows traders continue to price in roughly a 48% chance of a Fed rate hike in September, keeping the US Dollar well supported and limiting demand for non-yielding bullion.

Attention now shifts to Thursday's US Nonfarm Payrolls report, where economists expect the economy to have created around 114,000 jobs while the unemployment rate is forecast to remain at 4.3%. A stronger-than-expected report would reinforce expectations for higher interest rates and could extend gold's losses, while weaker labor market data may provide the precious metal with some relief.

Technical Analysis

Gold remains under firm bearish pressure, with price trading near $4,035 after failing to reclaim the key $4,080–$4,100 resistance zone. The broader structure remains negative, as the metal continues to form lower highs and lower lows following its rejection from the $4,240–$4,250 supply area.

The latest price action shows that buyers attempted a short-term recovery from the $3,960–$3,980 region, but the rebound stalled below former support. This suggests that the recent bounce is corrective rather than a genuine reversal. As long as Gold remains below $4,100, sellers are likely to remain in control.

On the downside, the next major support sits around $4,000, followed by the deeper target near $3,800, which aligns with the projected bearish path on the chart. A sustained break below $4,000 would confirm renewed bearish continuation and expose further downside.

On the upside, Gold would need to recover above $4,100 to ease immediate selling pressure. A stronger move above $4,240–$4,250 would be required to invalidate the bearish structure.

Momentum remains negative, with each recovery attempt being sold quickly. Unless buyers reclaim $4,100, the path of least resistance remains lower.

TRADE RECOMMENDATION

SELL GOLD

ENTRY PRICE: 4,040

STOP LOSS: 4,100

TAKE PROFIT : 3,800

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