Key Moments
- Gold (XAU/USD) pulled back toward the lower end of its daily range while holding above the $5,000 level during the European session.
- Escalating conflict in the Middle East supported safe-haven demand, but inflation worries and reduced Fed rate-cut expectations underpinned the US Dollar.
- Market participants appeared cautious ahead of this week’s FOMC decision and policy updates from the ECB, BoJ, and BoE.
Middle East Tensions Support Safe-Haven Demand
Gold (XAU/USD) gave back earlier intraday gains on Tuesday and moved back toward the bottom of its daily band heading into the European session, though the metal continued to trade above the key $5,000 psychological threshold.
Safe-haven interest in gold was underpinned by persistent geopolitical strain in the Middle East. There were few indications that the US-Israeli war on Iran was nearing a conclusion, with tensions intensifying between Israel and Hezbollah in Lebanon. The Israeli military stated that it is expanding its ground operation in southern Lebanon, an area widely associated with Hezbollah activity. This elevated risk backdrop provided ongoing support for the precious metal.
Oil-Linked Inflation Fears Weigh on Fed Cut Prospects
As the conflict extended into its third week, Iran continued to strike civilian infrastructure – including airports, ports, oil installations, and commercial centers – in six Gulf states using missiles and drones. In addition, continued disruption of shipping through the Strait of Hormuz, a critical route for a fifth of global oil flows, remained a pillar of higher crude prices.
These developments kept inflation concerns in focus and bolstered expectations that the US Federal Reserve could maintain restrictive policy for longer, and potentially even contemplate additional rate hikes. This environment is typically unfavorable for non-yielding assets such as gold and helped limit the upside for XAU/USD, reinforcing a cautious stance among bullish traders.
Stronger Dollar Caps Gold Ahead of Key Central Bank Decisions
The prospect of a more hawkish Fed stance, alongside the broader implications of the Middle East conflict, increased demand for the US Dollar. This followed a modest pullback in the currency from its highest level since May 2025 and contributed to keeping gold prices under pressure.
Despite these drivers, positioning in XAU/USD remained constrained as traders awaited the outcome of the Federal Open Market Committee’s two-day meeting on Wednesday before committing to stronger directional exposure. Policy decisions from other major central banks – the European Central Bank (ECB), the Bank of Japan (BoJ), and the Bank of England (BoE) – were also expected to influence gold price action later in the week.
Technical Picture: Bias Tilts to the Downside
On the 4-hour chart, the recent break below the 200-period Simple Moving Average (SMA) and confirmation beneath the 38.2% Fibonacci retracement of the February-March advance continued to favor sellers. The Moving Average Convergence Divergence (MACD) indicator (12, 26, 9) was positioned below the zero line, with the MACD line under its signal line and a negative histogram, indicating sustained downward momentum. The Relative Strength Index (RSI) stood at 41, pointing to a softer tone within the neutral band and aligning with a bearish bias.
On the upside, initial resistance was seen at the 38.2% Fibonacci retracement near $5,040, followed by the 200-period SMA around $5,063. A decisive move above this resistance cluster would be required to alleviate downside pressure and open the door toward the 23.6% retracement at $5,186.
On the downside, immediate support remained at the $5,000 psychological level, ahead of recent lows in the $4,995–$4,985 region. A break below this area would expose the 50.0% retracement at $4,921.41, signaling potential for a deeper pullback. A sustained close back above the 200-period SMA would soften the bearish narrative, whereas repeated failure below $5,040 would maintain focus on lower support zones.
(The technical analysis of this story was written with the help of an AI tool.)
US Dollar Performance Against Major Currencies
The table below summarizes the percentage change of the US Dollar against major peers, indicating that the USD showed the strongest performance versus the New Zealand Dollar.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | 0.27% | 0.27% | 0.26% | 0.10% | 0.15% | 0.73% | 0.25% | |
| EUR | -0.27% | -0.01% | -0.02% | -0.17% | -0.12% | 0.46% | -0.02% | |
| GBP | -0.27% | 0.00% | 0.00% | -0.17% | -0.12% | 0.47% | -0.01% | |
| JPY | -0.26% | 0.02% | 0.00% | -0.14% | -0.10% | 0.49% | 0.00% | |
| CAD | -0.10% | 0.17% | 0.17% | 0.14% | 0.05% | 0.64% | 0.16% | |
| AUD | -0.15% | 0.12% | 0.12% | 0.10% | -0.05% | 0.59% | 0.11% | |
| NZD | -0.73% | -0.46% | -0.47% | -0.49% | -0.64% | -0.59% | -0.48% | |
| CHF | -0.25% | 0.02% | 0.00% | -0.01% | -0.16% | -0.11% | 0.48% |
The heat map indicates percentage changes between major currency pairs, where the base currency is taken from the left-hand column and the quote currency from the top row. For instance, selecting the US Dollar on the left and moving to the Japanese Yen column yields the percentage change for USD (base)/JPY (quote).
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