Gold News: Price Prediction Points to $3166 as Israel-Iran Ceasefire Hits Gold

Gold Prices Slammed as Israel-Iran Ceasefire Sparks Risk Rally

Gold (XAU/USD) prices plunged 2.81% to $3,274.18 during June 22-28, marking their sharpest weekly drop in months as a surprise Israel-Iran ceasefire announcement erased geopolitical risk premiums. The metal broke below key support levels while equities and oil markets reflected a decisive shift back into risk assets.

Ceasefire Deal Drives Safe-Haven Exodus

The June 24 ceasefire, brokered by the U.S. and Qatar after weeks of escalating attacks, triggered a 1.35-2% intraday drop in gold to $3,320-$3,330. Selling extended for six consecutive sessions, illustrating how deeply geopolitical risk had been priced in. Equity indices surged, with the S&P 500 up 1.11% and Nasdaq gaining 1.43%, while Brent crude dropped 7% to $67.14 and the VIX fell 12%, reinforcing the risk-on rotation.

Federal Reserve Holds Rates, but Hawkish Bias Pressures Gold

The Fed held rates steady at 4.25-4.50% during its June 17-18 meeting, with projections showing slower GDP growth at 1.4% and core PCE inflation rising to 3.1%. The dot plot continued to show limited cuts for 2025, reducing expectations for July easing. Despite brief dovish remarks from Fed officials Bowman and Waller, real yields remained elevated, with the 10-year Treasury yield climbing to 4.39%, maintaining pressure on gold.

Inflation Data Undercuts Rate Cut Hopes

May PCE inflation data released June 27 showed headline inflation at 2.3% year-on-year, up from 2.1%, while core PCE came in at 2.7% versus 2.6% expected. Coupled with weaker personal spending and income data, the report pointed to stagflationary pressures that complicated calls for immediate Fed easing, reducing gold’s appeal as a defensive inflation hedge.

Technical Breakdown Accelerates Selling

Gold’s decline was exacerbated by a break below $3,300, a level that had held since late May. Momentum selling intensified as the metal fell through its 50% Fibonacci retracement and ascending trend channel.

RSI and MACD signals turned bearish, with the next key technical support seen at $3,250, suggesting further downside if selling pressure persists.

However, a normal 50% correction of the $2956.56 to $3500.20 trading range puts the target at $3166.46.

Gold Prices Forecast: Cautiously Bearish Unless Geopolitical Risks Return

Gold’s steep weekly drop underscores how aggressively geopolitical risk premiums had lifted prices in early 2025, leaving them vulnerable once that risk dissipated. With the Fed holding a hawkish bias, inflation data reducing near-term cut expectations, and technical damage reinforcing bearish sentiment, gold remains under pressure in the near term.

A rebound would likely require renewed geopolitical tensions, a significant inflation surge forcing Fed policy shifts, or a firm defense of the $3,250 support zone to stabilize prices for traders watching the next move. If this catalyst fails to emerge then look for a test of $3166.46.

More Information in our Economic Calendar.