Geopolitical Flashpoints and FOMC Anxiety Rattle Global Markets

*Dollar dipped as markets priced in no FOMC change, with Powell-Trump tensions adding uncertainty.

*Gold dipped as U.S.-China trade hopes trimmed safe-haven demand, though Middle East and South Asia tensions kept losses limited.

*WTI hovered near $60 as geopolitical risks mounted and oil traders braced for potential fallout from U.S.-Iran negotiations ahead of the May 11 round.

Market Summary

Markets were cautious on Tuesday as investors weighed geopolitical tensions and central bank uncertainties. The U.S. dollar weakened ahead of the highly anticipated FOMC decision, with expectations for no rate change that were already priced-in in the market. However, concerns over renewed friction between President Trump and Fed Chair Powell added an additional layer of policy risk, raising questions about the Feds independence.

Gold prices edged lower as optimism surrounding upcoming U.S.-China trade talks in Switzerland prompted investors to trim safe-haven exposure. Still, ongoing geopolitical tensions — including Israeli strikes in Yemen, unresolved U.S.-Iran nuclear negotiations, and rising India-Pakistan and India-Palestine strains — continued to provide underlying support, keeping gold relatively resilient ahead of the FOMC decision.

U.S. equities drifted lower, with sentiment pressured by geopolitical instability and a lack of progress in the U.S.-China trade talks. Global risk appetite remained subdued as markets awaited clarity from the Fed. In Asia, investor mood turned defensive on rising regional tensions, while European markets were broadly flat.

Oil prices firmed, with WTI trading near $60 as stalled nuclear talks between the U.S. and Iran highlighted the risk of prolonged supply disruptions. With Washington demanding full dismantlement of Irans program—an outcome seen as unlikely—investors braced for further volatility ahead of the next scheduled round of talks on May 11.

Current rate hike bets on 7th May Fed interest rate decision:

0 bps (92.3%) VS -25 bps (7.7%)

Source: CME Fedwatch Tool

Market Movements

DOLLAR_INDX, H4

The Dollar Index continued to slip despite expectations that the Federal Reserve will hold interest rates steady later today. Traders are closely looking for any signal from Chair Jerome Powell regarding future policy shifts. Previous dovish comments requiring "more evidence" to tighten policy had even drawn criticism from President Trump, signaling tensions between fiscal and monetary policy outlooks. Risks remain high for dollar holders ahead of the Fed statement.

The Dollar Index is trading lower following retracement from the resistance level. MACD has illustrated diminishing bullish momentum, while RSI is at 40, suggesting the index might extend its losses since the RSI stays below the midline.

Resistance level: 100.00, 102.65

Support level: 96.00, 92.15

XAU/USD, H4

Gold prices retreated modestly as renewed optimism over U.S.-China trade talks—slated to resume in Switzerland later this week—dampened immediate demand for safe-haven assets. Investors temporarily trimmed gold exposure in hopes of progress in trade negotiations. However, downside in gold remains limited as geopolitical tensions continue to simmer. Pakistan has accused India of significantly restricting the Chenab Rivers flow, stoking fears of regional instability after a deadly incident in Kashmir.

Gold prices are trading lower while currently testing the support level. MACD has illustrated increasing bearish momentum, while RSI is at 49, suggesting the commodity might extend its losses since the RSI retreated sharply from overbought territory.

Resistance levels: 3430.00, 3480.00

Support levels: 3285.00, 3220.00

Crude Oil, H4

Oil prices rebounded as U.S.-Iran nuclear talks faltered. President Trump has demanded complete dismantlement of Tehrans nuclear program, a condition Iran is unlikely to accept. If talks collapse, the U.S. may reimpose or expand sanctions, threatening global supply. This risk of supply disruption has provided fresh support to oil markets. The next critical round of talks is scheduled for May 11—investors are advised to stay alert for developments.

Oil prices are trading higher following the prior rebound from the support level. MACD has illustrated diminishing bearish momentum, while RSI is at 42, suggesting the commodity might extend its gains since the RSI rebounded from oversold territory.

Resistance levels: 65.05, 72.10

Support levels: 55.80, 41.60