Gold's recovery stalls below $4,540 as a partial Israel-Hezbollah ceasefire caps safe-haven demand, with traders awaiting US labor data for the next catalyst.
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Gold stalls below $4,540 as ceasefire caps safe-haven demand
Gold's recovery above $4,500 stalled on Tuesday as a partial ceasefire between Israel and Hezbollah tempered safe-haven flows, leaving the metal trapped within its May trading range.
COMEX gold rose 0.9 percent to $4,530 per ounce as of the European afternoon session, retracing Monday's 1 percent decline but failing to breach the $4,540 resistance level. The US Dollar Index slipped 0.1 percent to 99.05, providing some support to the dollar-denominated metal, according to Bloomberg data.
"The partial ceasefire between Israel and Hezbollah has reduced the immediate geopolitical premium in gold, but the broader Middle East picture remains unresolved," said Ole Hansen, head of commodity strategy at Saxo Bank. "Investors are reluctant to add fresh longs ahead of this week's US labor data."
Israel and Hezbollah agreed to a partial ceasefire on Monday, and US President Donald Trump said Prime Minister Benjamin Netanyahu had frozen plans to attack Beirut. The development capped further gains for the US dollar as a safe haven, though risk appetite remained subdued with US-Iran peace talks stalled and the Strait of Hormuz closed with no timeline for reopening.
US manufacturing data for May showed healthy business activity, shifting focus to the JOLTS Job Openings report due later Tuesday and the Nonfarm Payrolls release on Friday. The labor data will inform expectations for the Federal Reserve's monetary policy path, with markets pricing in a potential rate hike as eurozone inflation accelerated to 3.2 percent in May.
Key levels hold the metal in a narrow band
The 4-hour Relative Strength Index near 55 suggests bullish momentum, while the positive Moving Average Convergence Divergence reading indicates downside pressure has eased, according to technical data. Immediate resistance remains at $4,590, a level that has capped advances multiple times since mid-May. A break above that zone would expose the confluence of the mid-May lows and the top of the bearish channel from April at $4,645.
On the downside, support sits at Monday's low near $4,445, with additional protection at May's bottom around $4,370. The base of the bearish channel from April is at $4,340. Gold has traded within a $250 range since early May, with the metal's 52-week high of $4,890 set in April representing the next major upside target if resistance breaks.
COMEX gold inventories stood at 28.5 million ounces as of late May, according to exchange data, providing a cushion against any supply-side disruption. The metal remains supported by central bank buying, with the People's Bank of China adding to its reserves for a 10th consecutive month in May, according to official data.
The Nonfarm Payrolls report on Friday is the next catalyst for gold. A stronger-than-expected print would reinforce expectations for tighter Fed policy, pressuring gold, while a miss could reignite safe-haven demand and push prices toward the $4,590 resistance.
This article is for informational purposes only and does not constitute investment advice.
[1] Gold Price Forecast: XAU/USD recovery stalls below $4,540 amid cautious markets[2] Japanese Yen hangs near one-month low vs USD; bears turn cautious amid intervention fears - FXStreet[3] Gold Price Today, June 02: XAUUSD Retreats Toward $4,470 as Traders Eye $4,500 Floor - Markets.com[4] Nifty, Sensex Slip as Foreign Outflows and Global Risks Weigh on Sentiment - Investing.com India
