Gold Steadies Amid Iran Diplomacy Hopes and Hawkish Fed Outlook

Gold prices steadied on Tuesday after touching an intraday low of $4,291 as traders weighed fresh Middle East headlines. The precious metal recovered some ground following Iran's proposal to reopen the Strait of Hormuz within seven days if the US lifts its blockade and eases military pressure.

The US Dollar reversed its earlier gains, helping Gold regain some lost ground, while Oil prices extended their decline for a fifth straight day. However, tensions remain high after the US and Iran traded fresh threats of further military action over the weekend.

The main headwind for Gold remains the hawkish Federal Reserve policy outlook, which could limit its recovery unless the Strait of Hormuz reopens and triggers a meaningful decline in Oil prices and inflation concerns. The Fed delivered its first interest-rate hike in three years last week, raising the federal funds rate by 25 basis points to 3.75%-4.00%.

Technical analysis shows that Gold remains trapped between the 50- and 100-day Simple Moving Averages (SMAs) and the 200-day SMA, with momentum indicators pointing to a range-bound setup.