Key Moments
- Gold (XAU/USD) has been staging only a modest rebound while trading close to an over one-month low near $4,500.
- Heightened US-Iran tensions and a jump in Crude Oil prices have reinforced expectations for more hawkish central banks, lifting US yields and supporting the USD.
- Technical signals show XAU/USD locked below key resistance levels, with momentum indicators pointing to the risk of renewed downside.
Gold Recovery Falters Near One-Month Low
Gold (XAU/USD) is attempting a modest recovery in Asian trading on Monday, but the move lacks strong buying conviction. The metal is still hovering close to an over one-month trough around the $4,500 level reached the prior day. The broader backdrop continues to favor sellers, suggesting investors should be cautious about assuming a sustained upside reversal at this stage.
Markets remain focused on persistent inflation worries, which are keeping expectations alive for higher interest rates from major central banks. Coupled with a stronger US Dollar, this environment is limiting demand for non-yielding assets such as gold and constraining the current rebound.
US-Iran Tensions and Energy Shock Support the Dollar
The uneasy ceasefire between the United States and Iran is under severe strain following a sharp flare-up of violence in the Persian Gulf on Monday. Authorities in the United Arab Emirates (UAE) and South Korea reported attacks on ships transiting the key maritime corridor. The UAE also reported a fire at the oil port of Fujairah, which it said followed Iranian missile and drone strikes.
US President Donald Trump warned that Iran would be “blown off the face of the earth” if it targets American vessels accompanying ships through the strategic waterway, under a new initiative named “Project Freedom”.
These developments have heightened the risk of further instability in the Middle East and fueled a fresh leg higher in Crude Oil prices on Monday. The renewed surge in energy costs has reinforced the view that war-related price pressures could revive inflation and push major central banks, including the US Federal Reserve (Fed), toward more hawkish policy settings.
Data from the CME Group’s FedWatch Tool show that the probability of a Fed rate hike by year-end has risen to roughly 35%, up from less than 10% last Friday. This shift supports elevated US Treasury yields and acts as a tailwind for the US Dollar.
The confrontation over the Strait of Hormuz is also strengthening the Greenback’s role as the world’s reserve currency, further weighing on gold. Against this backdrop, any near-term rallies in XAU/USD are vulnerable to selling pressure, and market participants may prefer to see stronger follow-through buying before concluding that a durable bottom is in place.
Technical Picture: Bias Remains to the Downside
From a technical standpoint, XAU/USD continues to exhibit a bearish near-term structure. The pair is trading below the 200-period Simple Moving Average (SMA) on the 4-hour chart, currently at $4,655.02, and remains contained beneath the 38.2% Fibonacci retracement of the March-April advance. Despite the bounce from the $4,500 region, which aligns with the 50% retracement, gold is still capped by a dense overhead resistance zone.
Momentum readings are soft. The Relative Strength Index (RSI) is holding below the neutral 50 line at 39.84, while the Moving Average Convergence Divergence (MACD) indicator stays in negative territory. Together, these signals suggest the ongoing recovery attempt is at risk of fading once it approaches the 38.2% Fibonacci level at $4,595.23.
On the upside, any further advance could first encounter resistance near that $4,595.23 area, followed by the 200-period SMA at $4,655.02. Above that, the next technical barrier sits near the 23.6% retracement at $4,711.12.
On the downside, initial support is seen around the 50% retracement level near $4,501.57. If selling pressure intensifies, the 61.8% level at $4,407.90 comes into view, with additional downside cushions at $4,274.55 and $4,104.68.
US Dollar Performance Against Major Currencies This Week
The table below summarizes the percentage change of the US Dollar (USD) versus major peers this week. According to the data, the USD has shown particular strength against the Australian Dollar.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | 0.59% | 0.59% | 0.38% | 0.29% | 0.87% | 0.65% | 0.56% | |
| EUR | -0.59% | -0.01% | -0.24% | -0.30% | 0.33% | 0.05% | -0.01% | |
| GBP | -0.59% | 0.01% | -0.23% | -0.26% | 0.34% | 0.09% | -0.00% | |
| JPY | -0.38% | 0.24% | 0.23% | -0.02% | 0.55% | 0.35% | 0.16% | |
| CAD | -0.29% | 0.30% | 0.26% | 0.02% | 0.60% | 0.38% | 0.29% | |
| AUD | -0.87% | -0.33% | -0.34% | -0.55% | -0.60% | -0.27% | -0.35% | |
| NZD | -0.65% | -0.05% | -0.09% | -0.35% | -0.38% | 0.27% | -0.07% | |
| CHF | -0.56% | 0.00% | 0.00% | -0.16% | -0.29% | 0.35% | 0.07% |
The heat map figures represent percentage changes between currency pairs, with the currency in the left-hand column acting as the base and the currency in the top row as the quote. For instance, selecting the US Dollar on the left and moving to the Japanese Yen column shows the performance of USD (base)/JPY (quote).
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