U.S. and Iran resume negotiations; will gold prices rebound in the short term?

Bitget

News

汇通财经2026/07/20 10:39

Show original

By:汇通财经

Bitget offers one-stop trading for cryptocurrencies, stocks, and gold. Trade now!

A welcome pack worth 6200 USDT for new users! Sign up now!

Financial News July 20—— Global markets are in turmoil, while gold prices remain steady, consolidating and looking for direction.

On Monday (July 20) during the Asian and European sessions,

Gold prices saw a rebound after bottoming out. In the early session, gold declined alongside Asian equity markets but then slightly recovered into positive territory. It is currently trading around 4020, up 0.10%.

At local time on July 20, Iran’s Ministry of Foreign Affairs spokesperson Baghaei stated at a press conference that war and diplomacy are both means to safeguard national interests, and the channel for negotiations has not been completely closed.

He mentioned that Iran’s diplomatic team will not refrain from fulfilling their duties due to potential risks in negotiations, nor will the military abandon their mission to defend national territory because of the adversary’s advantage in equipment.

In response to questions about whether there is still room for U.S.-Iran negotiations, Baghaei replied that all of Iran’s diplomatic and military decisions are centered on national interests, and the two approaches can proceed concurrently. This means that the channels for dialogue have not been entirely shut off, which gave a slight boost to gold prices.

Currently, the Middle East situation remains tense, with the standoff between the U.S. and Iran continuing to escalate. Shipping in the Strait of Hormuz and local oil and gas facilities face frequent attacks. Geopolitical risks would usually fuel increased safe-haven buying of gold, but this time, the market is displaying an anomaly where the safe-haven logic has failed. Overall, gold prices remain under weak and volatile pressure, continuing to hover around the $4,000 mark since this week’s market open, and last week gold was even weaker.

According to Motilal Oswal Financial Services Senior Commodities Analyst Manav Modi, ongoing geopolitical turmoil is repeatedly disrupting market risk appetite, while multiple macro headwinds are suppressing gold, making it difficult for a bullish rebound to materialize.

U.S. and Iran resume negotiations; will gold prices rebound in the short term? image 0

A Strong U.S. Dollar and Global High Interest Rates Are the Core Factors Pressuring Gold Prices

The primary drivers behind the recent sharp weakness in gold prices are the strengthening U.S. dollar and the globally tightening monetary environment, both of which create headwinds for gold.

The U.S. Dollar Index has been rebounding, and since gold is priced in dollars, the cost for overseas funds to purchase gold rises, directly discouraging physical and speculative buying from abroad.

More importantly, gold is a non-interest-bearing asset, and its allocation value has been significantly diminished under the global anti-inflation policy backdrop.

Historically, funds would flock to gold during periods of high inflation to hedge against currency depreciation and preserve purchasing power, but the market logic in 2026 has now reversed.

Global energy conflicts are pushing up crude oil prices and exacerbating concerns about an inflation rebound. As a result, central banks worldwide have made controlling prices their top policy priority, leading markets to expect a prolonged period of elevated interest rates.

Unlike U.S. Treasuries and other risk-free bonds that can provide continuously rising returns, gold cannot generate interest or dividends, so capital naturally continues to flow out of precious metals.

As long as central banks around the world maintain tight monetary policies to suppress inflation, the upside potential for gold’s fundamentals will remain constrained.

Geopolitical Conflict Logic Has Reversed: Safe-Haven Benefits Turn Into Downside Pressure for Gold

The latest Middle East crisis has not benefitted gold, mainly because the continued rise in oil prices will reignite energy-driven inflation, slowing the current global downward trend in inflation, and forcing the Federal Reserve and other major central banks to extend the high interest rate cycle.

Various dollar-supportive news has been brewing, pushing both the U.S. dollar and Treasury yields higher, further reducing gold’s appeal. Even as Middle East conflicts escalate, geopolitical risk aversion is unable to provide effective support to gold prices; instead, intensified conflict amplifies expectations for prolonged high interest rates, which adds further downward pressure on gold.

However, recent U.S. consumer inflation, producer inflation, and retail sales data show signs of economic weakness. Whether these trends can persist remains to be seen with future data. For now, the market is more concerned about the inflation rebound risk driven by high oil prices, and traders continue to bet on the Federal Reserve maintaining high rates.

Several senior Fed officials have recently sent out hawkish signals, but the likelihood of inflation peaking is increasing as well. Chair Kevin Walsh, Governor Christopher Waller, and New York Fed President John Williams have all stated that the top policy priority is still managing inflation risk; only reliable data showing persistent declines in prices would lead them to consider rate cuts. For now, however, it appears that inflation may have already peaked.

Domestically in China, the central bank maintained the loan prime rate as expected, keeping liquidity conditions stable. This has limited impact on the trend of international gold prices.

Key Market Indicators to Watch Going Forward

In the short term, gold price trends are primarily anchored by three variables: crude oil prices, U.S. Treasury yields, and the U.S. Dollar Index. Any escalation of geopolitical conflict will only increase overall market volatility, but is unlikely to change the direction for gold.

Investors should closely monitor preliminary PMI data for manufacturing and services sectors in major global economies, European Central Bank rate decisions, and keep an eye on the latest developments in the Middle East, which may offer signals for a short-term turning point in gold prices.

From a technical perspective, spot gold remains suppressed by the descending resistance line (blue) and the lower boundary of the descending channel (red), and overall moving averages are still arranged in a bearish pattern. However, despite the steep declines in equity markets recently, gold has held up relatively well over the past two trading sessions, so a near-term reversal cannot be ruled out.

U.S. and Iran resume negotiations; will gold prices rebound in the short term? image 1

(Spot gold daily chart, source: easyMarkets)

Beijing Time 18:12, spot gold is trading at $4,020 per ounce.

Disclaimer: The content of this article solely reflects the author's opinion and does not represent the platform in any capacity. This article is not intended to serve as a reference for making investment decisions.

Understand the market, then trade.

Bitget offers one-stop trading for cryptocurrencies, stocks, and gold.

Trade now！

U.S. and Iran resume negotiations; will gold prices rebound in the short term?

A Strong U.S. Dollar and Global High Interest Rates Are the Core Factors Pressuring Gold Prices

Geopolitical Conflict Logic Has Reversed: Safe-Haven Benefits Turn Into Downside Pressure for Gold

Key Market Indicators to Watch Going Forward

You may also like

Crypto prices