Gold declines as US Dollar stays firm, geopolitical tensions persist

Gold eases on Tuesday as a firmer US Dollar prompts profit-taking.
US tariffs and escalating tensions with Iran keep geopolitical risks elevated.
Technically, the daily chart shows strengthening upside momentum following the break above $5,100.

Gold (XAU/USD) edges lower on Tuesday as a firmer US Dollar (USD) tempers demand for the precious metal, even as geopolitical and economic risks remain in focus. At the time of writing, XAU/USD trades near $5,175, down around 1.20% on the day.

The mild pullback reflects a bout of profit-taking after Bullion rallied for four consecutive days to its highest level in over three weeks. The recent advance was fueled by fresh uncertainty surrounding US trade policy and escalating tensions between Washington and Tehran.

US tariffs and Iran tensions keep risks elevated

Global trade tensions remain front and center as US President Donald Trump’s new 10% global tariff comes into effect on Tuesday. The measure was announced after the US Supreme Court ruled last week that Trump’s use of the International Emergency Economic Powers Act (IEEPA) to impose sweeping tariffs was unlawful.

While the current tariff stands at 10%, White House officials have indicated that a formal order is being prepared to raise the rate to 15%. The latest shift in US trade policy has also cast doubt over previously negotiated trade arrangements.

The European Parliament has reportedly paused the ratification process for the US-EU trade deal, while India has postponed negotiations to finalize an interim trade agreement with Washington.

On Monday, Trump warned that countries that “play games” would “be met with a much higher tariff, and worse, than that which they just recently agreed to.”

Meanwhile, the risk of potential US military action against Iran continues to mount, with high-level talks scheduled to resume in Geneva on Thursday.

Fed outlook in focus as traders price 50 bps of easing

Elsewhere, fading expectations of near-term Federal Reserve (Fed) interest rate cuts could act as a short-term headwind for the precious metal. However, traders are still pricing in nearly 50 basis points (bps) of easing by year-end, which may help limit deeper losses.

Looking ahead, the US economic docket features the Conference Board’s Consumer Confidence report and a heavy slate of Fed speakers, which could drive moves in the USD and Gold.

Technical analysis: Bulls regain control above $5,100

From a technical perspective, XAU/USD’s outlook has turned constructive following the break above the $5,100 barrier. On the daily chart, the near-term bias remains mildly bullish as prices hold comfortably above the rising 21-day and 50-day Simple Moving Averages (SMAs), both of which continue to slope higher and reflect an intact uptrend despite recent volatility.

The Relative Strength Index (RSI) at 58 has eased from overbought territory and is now hovering in the upper-mid range, suggesting positive but less stretched momentum. Meanwhile, the Average Directional Index (ADX) has softened slightly, indicating the trend remains in place, albeit with moderating strength.

Initial support is seen at the 21-day SMA near $5,030. A sustained hold above this level would keep buyers in control. Stronger support lies at the 50-day SMA around $4,740.

On the upside, immediate resistance stands near Tuesday’s peak around $5,250. A daily close above this level would open the door toward the $5,500 region as the next upside target.