Gold price struggles to survive: Iran tensions remain, Federal Reserve signals are mixed, bulls and bears battle around the 4600 level

Huitong Network May 1st News—— On Friday, gold prices were narrowly oscillating above $4,600 per ounce, with limited upside. The escalation of US-Iran tensions has boosted safe-haven demand for the US dollar. At the same time, accelerating US inflation and resilient economic data have reinforced expectations for the Federal Reserve to maintain high interest rates, jointly suppressing gold prices. However, market expectations for a rate cut within the year still exist, limiting the downside for gold. From a technical perspective, gold encountered resistance at the 38.2% Fibonacci retracement near $4,650. The future trend will depend on US economic data and developments in the Middle East.

During the Asian trading session on Friday (May 1st), the international gold market showed a slight pullback and failed to sustain the modest gains from the previous session. Spot gold is currently trading near $4,605 per ounce, down about 0.36%. Despite the weak price action, gold remains firmly above the key psychological level of $4,600 per ounce. Over the whole week, gold prices are likely to record a second consecutive weekly decline, reflecting a cautious market sentiment recently.

The direct reason for short-term pressure on gold prices is a slight rebound in the US dollar index. In the prior session, due to the sudden escalation of geopolitical risks, the dollar had once fallen to its lowest point in a week and a half. However, as US-Iran talks over nuclear issues and maritime blockades deadlocked, the dollar quickly regained safe-haven capital, thereby suppressing US dollar-denominated gold. Meanwhile, the Federal Reserve’s latest monetary policy signals are also complex—on the one hand, the official rate was maintained, but on the other hand, dissent within the Fed increased, and strong economic data further reinforced market expectations for the Fed to keep rates higher for longer. For non-yielding gold assets, this macro backdrop certainly limits upside potential for prices.

Geopolitical Tensions Rise: US-Iran Standoff Intensifies, Safe-Haven Flows Return to US Dollar

Recent developments in the Middle East have become one of the key variables affecting the movements of gold and the US dollar. It is reported that US President Donald Trump has formally rejected Iran’s proposal to open the Strait of Hormuz and lift the current maritime blockade, while postponing further negotiations on bilateral nuclear issues to a later stage.

Trump further stated that the US would continue to maintain its maritime blockade against Iran unless the Iranian regime agrees to a new deal that sufficiently eliminates US concerns over Iran's nuclear program.

More seriously, some media reported that the US government is actively considering a new round of military strikes against specific targets within Iran. These series of tough statements and potential actions raise the real risk of further escalation in US-Iran tensions.
Against the backdrop of a sudden increase in geopolitical uncertainty, the US dollar’s status as the world’s primary reserve currency and a safe-haven asset has become evident, attracting capital to flow from non-yielding assets such as gold to the dollar, thereby putting additional downside pressure on gold prices.

Complex Fed Signals: Hawkish Tone Mixed with Easing Expectations, Market Remains Uncertain

From a monetary policy perspective, the Federal Reserve decided at this Wednesday’s meeting to keep its key policy rate unchanged in the 3.50%-3.75% range. However, beneath this seemingly steady decision lies turbulence: the largest number of dissenting votes since 1992, with as many as three policymakers disagreeing over the dovish tone in the policy statement. This internal division suggests to the market that the Fed has not fully turned dovish.

Subsequently, a series of US macroeconomic data released on Thursday further reinforced the rationale for monetary tightening. According to the US Bureau of Economic Analysis, the Personal Consumption Expenditures (PCE) Price Index rose 0.7% month-on-month in March, and the year-on-year growth rate accelerated to 3.5% from 2.8% in February. Excluding the more volatile food and energy prices, the core PCE Price Index rose 3.2% year-on-year, above February's 3.0%.

Meanwhile, preliminary GDP estimates show the US economy grew at a 2.0% annual rate in the first quarter of 2026, a notable rebound from the revised 0.5% in the fourth quarter of 2025. With both accelerating inflation and economic resilience, markets now widely expect the Fed to keep rates unchanged for most of next year—a view that definitely supports the dollar and erodes gold’s appeal.

However, market sentiment is not entirely hawkish. Based on interest rate futures pricing, the probability that the Federal Reserve will cut rates by at least 25 basis points during 2026 jumped from just 1.3% the day before to over 15%.

This shift suggests some traders are positioning for a possible policy pivot in advance. Precisely this anticipation of rate cuts is restraining aggressive large-scale bets from US dollar bulls, and in turn, objectively helping gold avoid a steeper decline and barely hold above the $4,600 mark.

Technical Analysis: Ultra-Short-Term Rebound Meets Resistance, Key Levels to Determine the Trend

From a technical analysis perspective, gold prices broke through $4,600 and the 100-hour simple moving average during overnight trading, triggering some short covering that resulted in a brief rebound. However, the upward momentum quickly faced resistance near $4,650, a level that coincides with the 38.2% Fibonacci retracement from the drop since the April high ($4,651.19).

Current technical indicators are producing mixed signals: the Relative Strength Index is at 58.33, showing solid market momentum but not yet in overbought territory, while the MACD indicator remains slightly in negative territory.

Overall, the momentum indicators suggest that although gold prices remain above the short-term uptrend, bullish attempts are still marked by significant caution.

Therefore, before gold decisively breaks through the 38.2% Fibonacci retracement, rational investors should remain patient and refrain from betting hastily on a sustained mild rebound initiated from near $4,500 (also the one-month low in previous trading). If subsequent buying power strengthens further, the 50% Fibonacci retracement ($4,696.20) is likely to become the next key resistance level to the upside.

To the downside, immediate support is first being tested at the 23.6% Fibonacci retracement level ($4,595.49). If the weak trend continues and breaks below this region, the broader volatility range low of $4,505.46 will become the next target for the bears.

Market Outlook: Focus on US Economic Data and Middle East Developments

Looking ahead, market attention will gradually shift to key US macroeconomic figures released at the start of the new trading month.

The first of these is the ISM Manufacturing Purchasing Managers' Index, due for release later this Friday. This indicator will provide the market with the latest clues on the vitality of the US real economy and may have an immediate impact on the US dollar and gold prices.

Meanwhile, any updates on the Middle East crisis—especially whether there is a substantive military conflict or diplomatic breakthrough between the US and Iran—will continue to be a key variable driving safe-haven sentiment globally, influencing the capital flow between the dollar and gold, the two ends of this “seesaw”. Investors should remain highly vigilant, as any unexpected developments from either side could break the current narrow oscillation in gold prices and trigger a new trend.

At 14:08 Beijing time (UTC+8), spot gold is reported at $4,602.08 per ounce.