Gold stabilizes above $4,000 as the market waits for the Fed to set the tone

Last week, international spot gold fell for a second straight week, at one point slipping below $4,200/oz and hitting an intraday low of $4,024/oz before finding support from buyers near a key support zone. It finally closed at $4,217.05/oz, down 2.56% for the week. In market terms, the strong gains that gold had built up are going through a fairly complete technical correction, but holding the $4,000 level means the bulls have not lost control, and prices have likely entered a phase of consolidation and repricing.

Geopolitical easing expectations relieve the safe-haven premium

One of the main drivers of the pullback in gold was the marginal easing of tensions in the Middle East. Earlier in the week, an escalation in mutual strikes between the United States and Iran had lifted safe-haven sentiment sharply, but after Trump halted plans for military strikes and signaled the possibility of a U.S.-Iran agreement, tensions cooled rapidly. If the agreement is ultimately reached, the Strait of Hormuz may reopen, which would not only reduce the geopolitical risk premium but also put additional pressure on international oil prices, indirectly easing inflation pressure. For gold, the retreat in safe-haven buying tied to the conflict has indeed weakened upside momentum in the short term, but in the long run global uncertainty has not disappeared, and gold's defensive role has not been fundamentally changed.

Inflation remains elevated, pressuring gold, but the selling may be near exhaustion

U.S. May CPI rose 4.2% year over year and PPI rose 6.5%, both well above market expectations, showing that the disinflation process is not smooth. More importantly, with energy prices potentially rising again, there is a risk that inflation will reaccelerate, placing greater constraints on the Federal Reserve's policy stance. In theory, rising inflation increases expectations for real yields and weighs on gold, a non-yielding asset; but from the trading screen, gold quickly recovered after dropping to $4,024, suggesting that the earlier short-selling pressure has been largely released and that the market may already have partially priced in a more hawkish Fed.

Warsh's first policy appearance is the key variable

Looking ahead to the new week, the market focus will quickly shift to the first Fed rate decision under Warsh's leadership. The broad expectation is that the Fed will not raise rates immediately, but what truly determines gold's short-term direction is not the rate outcome itself, but the policy signal that follows. If Warsh stresses inflation risks in the press conference and hints that further tightening remains possible, the dollar and Treasury yields may strengthen again and gold could retest the $4,000 support. Conversely, if he sounds relatively balanced and acknowledges that inflation is still high but that economic and labor-market changes need to be watched, gold could stage a corrective rebound.

Technical patterns suggest the rebound still needs confirmation

From a technical perspective, gold has stabilized above $4,000 for now, but to confirm that a rebound is continuing, it still needs to break above $4,340/oz decisively; stronger resistance lies in the $4,450-$4,500/oz zone. Support below is concentrated at $4,250-$4,200/oz, and if that gives way, the $4,000-$4,100 area will become the main battleground between bulls and bears. In the domestic market, gold has found support around 900-880 yuan/gram, with short-term resistance at 935-950 yuan/gram; to open more upside space, it still needs to break through the 975-1,000 yuan/gram area.

Conclusion

Overall, gold is currently in a critical window where geopolitical cooling, elevated inflation, and policy repricing intersect. In the short term, whether the $4,000 mark holds will determine market sentiment, while Warsh's first policy remarks may become the key catalyst for the next phase. Investors should focus on progress in the U.S.-Iran agreement, changes in the Fed's language, and the interaction between the dollar and Treasury yields. If policy signals are hawkish, gold may remain range-bound; if the stance is more dovish, prices could build toward another rebound after this consolidation phase.