Gold prices stabilized during Monday’s trading session, after posting significant gains of 2.4% in the previous session.
The yellow metal is currently trading above the weekly pivot point of $4,244, as it looks to test the first weekly resistance level at $4,469. Breaking above this level is likely to lead to further gains, with the next resistance level at $4,597.
If gold fails to maintain trading above the weekly pivot point of $4,244, it will test support levels near $4,117 then $3,891.
In terms of geopolitical tension, Iran said it was nearing a final pact with Oman defining new shipping lanes between them through the Strait of Hormuz but repeated that the U.S. must meet other conditions, including compensation and an end to sanctions and military threats, before the strategic waterway is reopened.
The strait, through which about a fifth of global oil and liquefied natural gas flowed prior to the conflict, has been effectively blocked since the U.S.-Israel attacks on Iran on February 28, pushing up oil prices and inflation.
Iranian Foreign Ministry spokesman Esmaeil Baghaei said on Monday that talks with Oman on arrangements for navigation through the strait were “progressing smoothly and constructively”, with an agreement reached on a shipping route map, while some technical issues on a joint statement remained unresolved.
He said during a weekly press conference in Tehran that the discussions also covered mechanisms for safe navigation, environmental protection, maritime services and combating crime, adding that such services would normally entail receiving payment in return.
On the economic data front, The U.S. consumer price index is seen accelerating to 4.2% in the twelve months to May, compared to 3.8% in the prior month. On a monthly basis, CPI is tipped to cool to 0.3% from 0.6%.
Stripping out volatile items like food and fuel, so-called “core” CPI is anticipated to speed up to 2.9% year-on-year and 0.5% month-on-month.
Middle East tensions are likely to be hovering in the backdrop of these numbers, especially after renewed strikes between Iran and Israel cast doubt over whether President Donald Trump can negotiate a lasting peace deal with Tehran.