Key Moments
- Gold trades lower in early Asian dealings but continues to hold above the $4,600 level.
- Rising inflation concerns and more hawkish central bank expectations pressure XAU/USD and support the US Dollar.
- Technical signals point to persistent downside bias, with $4,600 seen as a key level for confirming further weakness.
Gold Pressured by Policy Outlook but Holds Key Support
Gold (XAU/USD) remains under pressure in Asian trading on Monday, extending recent softness but showing resilience above the $4,600 threshold. The move reflects a cautious tone rather than aggressive liquidation, as prices drift lower without strong follow-through selling.
Market sentiment toward the metal is being dampened by a shift toward more hawkish stances from major central banks, including the US Federal Reserve (Fed). Policymakers have turned more vigilant on inflation risks amid worries that energy shocks tied to geopolitical tensions in the Middle East could re-ignite price pressures, curbing appetite for the non-yielding asset.
Geopolitical Tensions and Oil Dynamics
US President Donald Trump announced a plan to guide ships stranded in the Gulf through the Strait of Hormuz under a project called “Project Freedom” and also warned that if this process is disrupted, it will be dealt with forcefully. Top Iranian lawmaker Ebrahim Azizi said that any US interference in the strategic waterway will be considered a violation of the ceasefire. Adding to this, Iran’s Islamic Revolutionary Guard Corps (IRGC) accused the US of failing to honour agreements and said that renewed hostilities are likely.
These developments raise doubts about diplomatic efforts to bring an end to the conflict, given the lack of progress in US-Iran peace talks, and help limit the downside in Crude Oil prices. The prospect of firmer energy markets feeds into the broader inflation narrative that is shaping central bank expectations and weighing on gold.
US Data, Fed Dissent, and Dollar Support
US macro releases last Thursday showed that inflation accelerated in March, reinforcing the view that the Fed may keep interest rates unchanged well into next year. The central bank’s decision to leave its key policy rate at 3.50%-3.75% was notable for featuring the highest number of dissents since 1992, with three officials objecting to the accommodative tone of the statement.
Adding to the hawkish tone, Minneapolis Fed President Neel Kashkari said on Sunday that a prolonged Iran conflict increases inflation risks and economic damage, and he raised the possibility of moving rates higher given the uncertainty surrounding all aspects of the war.
This backdrop has helped the US Dollar (USD) attract dip-buying after opening the week with a modest bearish gap, adding an additional headwind for gold. Even so, the absence of strong follow-through selling in XAU/USD urges caution for bears planning for deeper declines.
Macro Calendar in Focus
Investors are now awaiting a series of key US data releases due at the start of the new month. The closely watched US Nonfarm Payrolls (NFP) report on Friday is expected to provide more substantial direction for gold and the broader dollar complex. Until then, the current fundamental setup suggests that the dominant bias for the precious metal remains tilted to the downside.
Technical Picture: Key Levels Around $4,600
On the 1-hour chart, momentum indicators continue to flag downside pressure. The Moving Average Convergence Divergence (MACD) stays below the zero line with a negative reading, signaling that sellers retain control. By contrast, the Relative Strength Index (RSI) stands at 49.60, indicating broadly neutral conditions rather than an overstretched market.
From a price-action perspective, traders are watching for a clean break below $4,600 – which also aligns with the 23.6% Fibonacci retracement of the decline from the April swing high – to reinforce the case for extended losses toward the broader structural low near $4,512.28.
Resistance Markers on the Upside
On the topside, several technical hurdles cluster just above current levels. Initial resistance is seen at the 200-period Exponential Moving Average (EMA) at $4,650.47, followed immediately by the 38.2% Fibonacci retracement at $4,655.61.
A sustained move above this zone would open the way toward the 50.0% retracement at $4,699.88 and the 61.8% retracement at $4,744.15. Beyond these, higher resistance barriers are noted at $4,807.19 and $4,887.48.
| Gold Technical Levels (XAU/USD, 1-hour) | Price | Comment |
|---|---|---|
| Key support / confirmation level | $4,600.00 | 23.6% Fibonacci retracement; break needed to confirm deeper downside |
| Lower structural support | $4,512.28 | Broader structural low target if $4,600 gives way |
| 200-period EMA (resistance) | $4,650.47 | First resistance on the topside |
| 38.2% Fibonacci retracement | $4,655.61 | Resistance just above the 200-period EMA |
| 50.0% Fibonacci retracement | $4,699.88 | Next upside objective if initial resistance is cleared |
| 61.8% Fibonacci retracement | $4,744.15 | Higher resistance level |
| Further resistance | $4,807.19 | Additional upside barrier |
| Further resistance | $4,887.48 | Higher resistance target |
(The technical analysis of this story was written with the help of an AI tool.)
Interest Rates: Key Concepts for Market Participants
What are interest rates?
Interest rates are charged by financial institutions on loans to borrowers and are paid as interest to savers and depositors. They are influenced by base lending rates, which are set by central banks in response to changes in the economy. Central banks normally have a mandate to ensure price stability, which in most cases means targeting a core inflation rate of around 2%. If inflation falls below target the central bank may cut base lending rates, with a view to stimulating lending and boosting the economy. If inflation rises substantially above 2% it normally results in the central bank raising base lending rates in an attempt to lower inflation.
How do interest rates impact currencies?
Higher interest rates generally help strengthen a country’s currency as they make it a more attractive place for global investors to park their money.
How do interest rates influence the price of Gold?
Higher interest rates overall weigh on the price of Gold because they increase the opportunity cost of holding Gold instead of investing in an interest-bearing asset or placing cash in the bank. If interest rates are high that usually pushes up the price of the US Dollar (USD), and since Gold is priced in Dollars, this has the effect of lowering the price of Gold.
What is the Fed Funds rate?
The Fed funds rate is the overnight rate at which US banks lend to each other. It is the oft-quoted headline rate set by the Federal Reserve at its FOMC meetings. It is set as a range, for example 4.75%-5.00%, though the upper limit (in that case 5.00%) is the quoted figure. Market expectations for future Fed funds rate are tracked by the CME FedWatch tool, which shapes how many financial markets behave in anticipation of future Federal Reserve monetary policy decisions.
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