Gold rises as Middle East conflict cools
XAU/USD analysis
The US has not announced any new strikes against Iran since Thursday, when it conducted its thirteenth consecutive day of attacks, while US Ambassador to the UN Mike Waltz told Fox on Sunday that the President is "giving talks some space" [1]. Meanwhile, Reuters reported that Tehran would halt its own attacks as long as the US does the same, adding to the optimism. [2]
This de-escalation is pushing oil prices sharply lower once again, easing inflationary risks ahead of the Fed rate decision on Wednesday. Consumer prices cooled in June, with CPI dropping 0.4% month-on-month in the first contraction in more than six years. This could allow the Fed to refrain from hiking, and the fresh pullback in energy prices helps, with CME's FedWatch Tool assigning the highest probability to a hold. [3]
The lower geopolitical temperature and easing inflation concerns are pushing the USDOLLAR down and lifting XAU/USD to a strong weekly start. Bullion has the chance to return above the EMA200, which would pause the downside bias and allow it to extend its recovery to the 38.2% Fibonacci. However, a rejection of these pivotal resistance levels would reinforce the bearish outlook, leaving it exposed to deeper declines.
The precious metal continues to face an unfavourable technical and fundamental environment. Despite the US-Iran hostilities pause, disruptions to energy flows continue and the Middle East conflict is widening. Transit through the Strait of Hormuz has dropped in recent days, while shipping in the Red Sea, another crucial chokepoint, also came under attack last week [4]. Saudi Arabia struck targets in Yemen after the Houthis claimed attacks on energy facilities. [5]
Against this challenging backdrop, the recent cooling in inflation may prove short-lived, with tariffs and AI exacerbating pressures. The war sending, new levies of 10%-12.5% under Section 301 [6] and the physical AI buildout are all contributing to higher prices and keeping pressure on the Fed for monetary tightening. This creates scope for a hawkish outcome this week even if officials keep rates unchanged. The higher-for-longer environment benefits the dollar while weighing on non-yielding assets like gold.
Nikos Tzabouras
Senior Financial Editorial Writer
Nikos Tzabouras is a graduate of the Department of International & European Economic Studies at the Athens University of Economics and Business. With extensive experience in market analysis and a strong foundation in international relations, he brings a unique perspective to financial markets. Nikos emphasizes not only technical analysis but also on fundamentals and the growing influence of geopolitics on financial trends.
As a Senior Financial Editorial Writer, he delivers comprehensive and forward-looking insights across a wide range of asset classes, including equities, commodities, and currencies. His work explores how macroeconomic events, political developments, and global policies impact market dynamics, providing readers with a deeper understanding of both short-term movements and long-term trends.
References
| Retrieved 27 Jul 2026 https://www.youtube.com/watch | |
| Retrieved 27 Jul 2026 https://www.reuters.com/world/asia-pacific/iran-will-halt-attacks-long-us-maintains-pause-iranian-source-says-after-trump-2026-07-26/ | |
| Retrieved 27 Jul 2026 https://www.cmegroup.com/markets/interest-rates/cme-fedwatch-tool.html | |
| Retrieved 27 Jul 2026 https://x.com/UK_MTO/status/2080043376351535532 | |
| Retrieved 27 Jul 2026 https://spa.gov.sa/en/N2640956 | |
| Retrieved 29 Jul 2026 https://ustr.gov/about/policy-offices/press-office/fact-sheets/2026/july/fact-sheet-ustr-section-301-action-response-failure-60-economies-ban-imports-produced-forced-labor |
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