Gold prices extended their decline on Tuesday, following last week's gains, and are now trading in a wide range around the 4900 level. The consecutive drops suggest a developing bearish trend for the precious metal. The current price of gold is being driven by three core factors: expectations for Federal Reserve policy, geopolitical tensions involving Iran, and diplomatic negotiations concerning Ukraine. These are compounded by softer-than-expected US inflation data and a week packed with key macroeconomic releases.

Core Drivers: Rate Cut Expectations and Geopolitical Risk Premium Since late 2025, gold prices surged to historical peaks, catalyzed by the dual forces of interest rate cut expectations and geopolitical risk premiums. This fundamental driver has not shown any substantial signs of weakening so far. Markets are currently pricing in the new round of indirect talks between the US and Iran, scheduled to take place in Geneva from tonight through tomorrow morning. A former US President commented on the significance of the negotiations, describing Iran as a very tough negotiator and expressing curiosity about the potential outcomes. When questioned about the likelihood of a deal, the individual stated a belief that Iran wants an agreement and wishes to avoid the consequences of failing to reach one.

Data Analysis: Soft Inflation in Focus, Direction to Be Set This Week The US Consumer Price Index for January emerged as a critical variable. The data came in significantly below market forecasts, strongly reinforcing expectations that the Federal Reserve might begin its monetary easing cycle sooner than anticipated. This directly lowers the opportunity cost of holding non-yielding assets like gold, establishing a solid floor for prices during the current consolidation phase. The January CPI showed a year-on-year increase of 2.4%, lower than the expected 2.5% and the previous reading of 2.7%. Month-on-month inflation data also fell short of expectations by 0.1 percentage points. Comments from a former Federal Reserve Governor, interpreted as dovish, have further solidified market expectations for 25-basis-point rate cuts in both March and June. This is expected to continue depressing real yields, favoring capital inflows into gold. Recent movements in Treasury yields have pre-empted this shift, with a bull steepening observed as yields declined across the curve. The core market debate now centers on whether the soft inflation data represents a trend reversal or merely a short-term fluctuation. The dense schedule of macroeconomic data this week, including the PCE report and the minutes from the Fed's January policy meeting, is seen as key to breaking the current stalemate.

Institutional Views: Rate Cut Pricing Heats Up, Gold Holds Key Level An analyst from Motilal Oswal Financial Services noted that the disappointing US inflation data has cemented expectations for Fed easing, pulling down the 10-year Treasury yield. Markets are now pricing in a nearly 50% probability of a third Fed rate cut before December, helping gold prices reclaim ground above the $5000 mark. A February 17th report from Vatee suggested that, with thin liquidity due to a US market holiday and a stronger US dollar, gold faced downward pressure. However, geopolitical variables, such as Russia-Ukraine talks and Iranian military exercises, continue to provide mid-term uncertainty and support for gold. The short-term outlook involves a tussle between 4980 and 5000, with attention focused on guidance from the Fed minutes and upcoming data. An analyst from China Securities believes the long-term opportunity for gold remains intact into 2026. The primary drivers of the current rally are identified as geopolitical tensions, de-dollarization trends, and central bank buying, rather than being solely dependent on interest rate movements. Short-term volatility is not expected to alter the medium-term upward trend.

Summary and Technical Analysis Gold is currently caught in a three-way tussle involving the pace of Fed policy, the Iran situation, and the Ukraine geopolitical landscape. Short-term consolidation does not negate the medium-term supportive logic. This week is critical due to the high-impact data releases. The Fed meeting minutes and subsequent macroeconomic figures are anticipated to provide clear directional cues. From a trading perspective, close attention should be paid to policy signals and geopolitical developments to identify trend opportunities following a breakout from the current consolidation. From a technical standpoint, spot gold's breach below the 0.618 Fibonacci retracement level of the recent advance at 4955 has shifted the near-term bias to favor sellers. Markets are betting on factors such as a potential US-Iran de-escalation and growth indicators excluding PCE. Support levels to watch include the 30-day moving average and the lower boundary of the rising price channel. Resistance is situated near 4944. Traders are advised to monitor for any new bearish catalysts and watch for potential setups where the price fails to decline further despite negative news, suggesting underlying strength. As of 15:41 Beijing time, spot gold was trading at $4918 per ounce.