• Oil slump eases inflation pressure before Warsh’s first Fed decision.
• Fed hike odds fall as traders await SEP projections.
• RBA and BoJ hawkishness keep central bank risks alive.

Gold (XAU/USD) price rises over 0.81% on Tuesday as the US-Iran deal eased inflationary pressures, prompting traders to scale back bets that the Federal Reserve (Fed) will raise rates later in 2026. At the time of writing, the XAU/USD pair trades at $4,344 after bouncing off daily lows of $4,306.

XAU/USD rises as lower yields and Dollar support bullion

Geopolitical noise seems to be calming as the US and Tehran agreed to a truce, set to be signed on Friday. Consequently, Oil prices plummeted over the last two days, easing worldwide inflationary pressures and driving the Greenback lower, which is closely correlated with West Texas Intermediate (WTI).

On Tuesday, the Federal Reserve began its two-day meeting. The central bank is expected to keep rates unchanged and publish the Summary of Economic Projections (SEP), which presents its forecasts for economic growth, inflation, and the future path of the Fed Funds rate.

After this, the new Fed Chair, Kevin Warsh, will lead its first post-setting monetary policy press conference, with most investors eyeing his initial stance on policy, the balance sheet, and how often policymakers will hit the media.

Money markets are speculating that the Fed will hold rates unchanged, with 80% odds of maintaining rates, while the odds of a rate hike are 20%, according to Prime Terminal data.

Worth noting that two major central banks tilted hawkishand blamed the Middle East conflict. The Reserve Bank of Australia (RBA) held rates unchanged, but hinted that if inflation edges higher, further tightening would be needed.

The Bank of Japan (BoJ) did its part, hiking rates by 25 basis points to 1%, but didn’t signal the path for interest rates, amid the absence of Governor Kazuo Ueda due to hospitalization.

US Treasury yields are also diving sharply. The US 10-year Treasury note yield is down nearly 5 basis points (bps) to 4.484%. This capped the Greenback advance, as measured by the US Dollar Index (DXY). The DXY, which measures the buck’s value against a basket of six peers, loses 0.12% at 99.54.

US data showed that the ADP Employment Change 4-week average indicated that private companies hired 25.5K people, down from 29K previously, signaling a hiring slowdown.

Ahead this week, the US economic docket will also feature Retail Sales, expected to remain at 0.5% MoM in May, unchanged, and Initial Jobless Claims.

XAU/USD technical outlook: Gold advances, but stalls near $4,400

From a technical perspective, Gold seems poised to trade sideways, as it would face key overhead resistance levels. The Relative Strength Index (RSI) shows that sellers are in control, but buyers are gaining some near-term momentum. Nevertheless, the index remains below its 50 neutral level, indicating a bearish stance.

On the upside, Gold needs to clear a downward resistance trendline and the 20-day Simple Moving Average (SMA) around $4,400. Once hurdled, the next stop would be the 200-day Simple Moving Average (SMA) at $4,458 ahead of the $4,500 figure. Up next lies the 50-day SMA at $4,571

For a bearish continuation, XAU must drop below $4,300 to challenge the psychological $4,250 level. Below this, the next demand zone would be at $4,200, followed by the June 11 swing low at $4,023.