Gold (XAU/USD) fell below the $4,100 level, reaching a new two-week low amid broad US dollar strength. However, the price has since recovered and is now attempting to hold above this level. Despite encouraging signals emerging from negotiations between the United States and Iran, market participants remain cautious about the prospects for a final agreement. Combined with the Federal Reserve's hawkish rhetoric, this has helped lift the US dollar to its highest level since May 2025, adding further pressure on precious metal prices.

Nevertheless, optimism in financial markets remains limited due to conflicting signals from Washington and Tehran. U.S. Vice President J.D. Vance stated that Iran had agreed to allow international observers and was prepared to undergo extensive weapons inspections as part of the diplomatic process. At the same time, Iran's Foreign Ministry, through state media, emphasized that Tehran had not undertaken any new commitments regarding inspections.

Adding to the uncertainty, U.S. President Donald Trump stated that preventing Iran from obtaining nuclear weapons remains a higher priority than any potential economic consequences arising from a prolonged conflict. Meanwhile, Iranian Parliament Speaker and chief negotiator Mohammad Bagher Ghalibaf said that the Strait of Hormuz would remain under Tehran's control and would not return to its pre-conflict status. These developments continue to support the geopolitical risk premium and enhance the appeal of the U.S. dollar as a safe-haven asset.

Regarding monetary policy, the Federal Reserve indicated last week that additional interest rate increases may be required this year if inflation remains persistent. Chicago Federal Reserve Bank President Austan Goolsbee also acknowledged that inflationary pressures are strengthening and remain well above the Fed's 2% target. This has reinforced expectations that the Federal Reserve may raise interest rates at least once more this year, potentially in September or December. As a result, the dollar remains supported, while non-yielding gold continues to face downside pressure.

To identify better trading opportunities, market participants should pay close attention to the preliminary U.S. Purchasing Managers' Index (PMI) data scheduled for release during the North American session. Together with speeches from FOMC officials, these reports could influence the direction of the U.S. dollar and provide short-term momentum for gold prices. However, the market's primary focus should remain on the Personal Consumption Expenditures (PCE) Price Index and the final U.S. first-quarter GDP figures, both of which are scheduled for release on Thursday. In addition, any developments related to U.S.-Iran relations could increase volatility and create additional trading opportunities.

From a technical perspective, XAU/USD remains in a short-term downward trend while attempting to hold above the key psychological level of $4,100. Oscillators remain in negative territory, indicating that bears retain control of the market. At the same time, the Relative Strength Index (RSI) is approaching oversold territory, suggesting the possibility of a modest correction or a period of consolidation. The nearest resistance level is located at the psychological $4,200 level.