Gold Edges Higher Near $4,800 as Inflation Fears Linger

Key Moments:

Gold Finds Support After Bearish Gap But Lacks Conviction

Gold (XAU/USD) is attempting to extend a modest intraday rebound after opening the week with a bearish gap, recovering from the $4,737-$4,738 zone, which marked a one-week low earlier on Monday. The metal is changing hands around the $4,800 level heading into the European session.

The move coincides with a pullback in the US Dollar from a one-week high, halting its recovery from a nearly two-month low reached on Friday. This softer USD backdrop is offering some support to bullion. However, a sharp advance in Crude Oil prices is reviving concerns about inflation, driving a modest uptick in US Treasury yields and curbing enthusiasm for the non-yielding asset.

US-Iran Tensions Stoke Risk Aversion and Support the Dollar

Geopolitical risks in the Middle East are again in focus as the standoff between the United States and Iran over the Strait of Hormuz dampens expectations for further diplomacy before the current ceasefire expires on April 22.

The US Navy intercepted and seized an Iranian-flagged cargo vessel in the Gulf of Oman as part of its blockade. Iran has treated the action as a violation of the ceasefire and has reclosed the key shipping chokepoint after having briefly reopened it following a 10-day truce between Israel and Hezbollah on Friday. In parallel, US President Donald Trump reiterated that the naval blockade of Iranian ports would remain in place until a peace agreement is reached.

The White House has confirmed that US Vice President JD Vance is scheduled to head a new delegation for a second round of negotiations aimed at ending the conflict with Iran. Iranian state media, however, has indicated that Iranian officials will not engage while the blockade is ongoing. This stance undermines hopes for a peace deal before April 22 and fuels a renewed wave of global risk aversion, reinforcing demand for the US Dollar as a reserve currency.

Even so, USD bulls appear reluctant to significantly extend long positions as market participants dial back expectations for further interest rate hikes by the Federal Reserve.

Fed Expectations Offer a Tailwind to Bullion

According to the CME Group’s FedWatch Tool, markets are assigning roughly a 40% probability to a Fed rate cut by the end of the year. This outlook is limiting the scope for additional USD appreciation and is providing a counterbalancing tailwind to Gold, which benefits from lower prospective interest rates.

At the same time, the absence of strong follow-through buying in XAU/USD encourages caution. Market participants remain wary of assuming that the recent uptrend from the March swing low near $4,100 will resume without interruption. With no major US economic releases scheduled, both the Dollar and Gold are likely to react primarily to fresh headlines related to the US-Iran situation.

Technical Picture: $4,805.60 Marked as Key Barrier

On the intraday chart, XAU/USD is struggling to sustain its bounce above the 100-hour Simple Moving Average (SMA) and to firmly secure acceptance above the $4,800 handle. Momentum indicators are not yet confirming a bullish shift. The Relative Strength Index (RSI) sits around 44, signaling waning upside momentum, while the Moving Average Convergence Divergence (MACD) indicator remains below its signal line with a negative histogram.

This configuration suggests that sellers still maintain the upper hand unless Gold can convincingly reclaim nearby resistance.

The $4,805.60 100-hour SMA is identified as the initial and sole clear resistance level in the current setup. A decisive and sustained move above this threshold would be required to mitigate the immediate bearish tone and open room for a more meaningful recovery. While XAU/USD remains capped beneath this barrier, short-lived rallies are likely to encounter selling pressure rather than signaling a durable shift to a bullish regime.

(The technical analysis of this story was written with the help of an AI tool.)

Inflation and Gold: Conceptual Backdrop

Inflation is the rate at which prices for a representative basket of goods and services increase. Headline inflation is generally reported as a month-on-month (MoM) and year-on-year (YoY) percentage change. Core inflation removes volatile categories such as food and fuel, which can be heavily influenced by seasonal or geopolitical developments. Economists and central banks typically focus on core inflation and often aim to maintain it near a target level, commonly around 2%.

The Consumer Price Index (CPI) is the standard gauge for tracking changes in the cost of that basket of goods and services over time, also expressed on a MoM and YoY basis. Core CPI, which excludes food and energy, is closely watched by policymakers. When Core CPI climbs above 2%, it often leads to higher interest rates; when it falls below 2%, it can prompt lower rates. Since elevated interest rates tend to support a currency, higher inflation – by driving expectations of tighter policy – can boost that currency, and the reverse is typically true when inflation declines.

For Gold, the interaction with inflation and interest rates is nuanced. Historically, investors often turned to Gold during bouts of high inflation to preserve purchasing power, and it can still serve as a safe-haven asset in periods of acute market stress. However, in many environments, when inflation rises and central banks respond with higher interest rates, the opportunity cost of holding Gold increases relative to yield-bearing assets or cash deposits. That dynamic is generally negative for Gold. Conversely, when inflation and interest rates move lower, the metal can become relatively more attractive as an investment alternative.