I. Gold Rebounds Over 1.5% on Tuesday, Stays Choppy in Asian Trade on Wednesday



On Tuesday, September 29, spot gold rose 1.6% to settle at $4,181.59 per ounce, hitting an intraday low of $4,113.52. Prices rebounded after dropping nearly 4% in a single session to hit over 7-week lows, briefly pushing back above $4,180. In early Asian trade on Wednesday, September 30, London gold traded at $4,174.87, down $7.09 or 0.17% intraday.

This rally followed the previous session's sharp slide. Peter Grant, Vice President and Senior Metals Strategist at Zaner Metals, noted that Tuesday's price action was primarily a correction of the prior day's losses, and gold continues to face significant headwinds.

II. Limited Progress in US-Iran Talks, Geopolitical Risks Persist



US President Donald Trump denied ever proposing conditions to Iran such as easing sanctions or unfreezing assets. Iranian President Masoud Pezeshkian stated that Tehran is willing to negotiate on its nuclear program and other issues but will not accept coercion; Iranian Foreign Minister Abbas Araghchi stated that diplomacy is the only way to resolve the conflict.

Qatari mediators attempted to push for a diplomatic breakthrough between the US and Iran this week, but AXIOS cited three sources familiar with the negotiations stating that progress has been minimal and talks have stalled, with neither Washington nor Tehran willing to yield. While official confirmation is pending, the trajectory of negotiations remains a core geopolitical cue for the gold market.

III. Energy Market Pullback and Fed Stance Ease Tensions Together



Bulk energy prices fell notably on Tuesday, with European benchmark contracts down $2.69 or 2.6% to close at $102.59 per barrel, and US benchmark contracts down $3.22 or 3.5% to settle at $89.38 per barrel. Strategic reserve releases by the US, the resumption of operations on Saudi Arabia's East-West pipeline, and recovering September exports from Middle Eastern producers also factored into supply observations.



New York Fed President Williams stated that the Fed may only need to raise rates one more time this year, adding that there is no need to rush following action taken at the September meeting. CME FedWatch data showed market expectations for an October Fed rate hike dropped to 49.6% from 68% the previous day, while December rate hike odds fell to 91.5% from 95%.

Divergent voices remain within the Fed. Governor Barr reiterated the need for further policy adjustments, while Chicago Fed President Austan Goolsbee noted that inflation running persistently above the 2% target requires seeing evidence of a cooling trend, though he expects eventual rate cuts.

IV. PCE and NFP to Test the Sustainability of Gold's Rebound

The US 2-year Treasury yield fell 3.51 basis points on Tuesday to 4.889%, touching 4.9596% intraday; the 10-year yield rose 1.32 basis points to 5.255%, and the 30-year yield climbed 3 basis points to 5.592%. The US September consumer confidence index dropped to 81.9, and job openings fell to 7.08 million, both missing prior market expectations.

Tonight will feature the release of the August PCE, the Fed's preferred inflation gauge, followed by the September non-farm payrolls report on Friday. The Fed's rate path divergence, breakthroughs in US-Iran talks, and actual prints in inflation and employment data will jointly dictate whether gold's rebound can extend.