Key Moments
- Gold (XAU/USD) has struggled to extend an intraday rebound after hitting its lowest level since March 30 around $4,480 during Monday’s Asian session.
- Persistent geopolitical tensions and firmer crude oil prices have supported the US Dollar, reinforcing expectations for a more hawkish Federal Reserve stance.
- Technical signals, including price action below $4,500 and bearish RSI/MACD readings, continue to point to downside risks for gold.
Fundamental Backdrop Keeps Pressure on Bullion
Gold (XAU/USD) has been unable to build on a modest bounce from an intraday low around the $4,480 area – its weakest level since March 30 – reached in Asian trading on Monday. The broader environment remains unfavorable for the metal, with renewed US Dollar (USD) strength and higher yields limiting any upside for the non-yielding asset.
Demand for the USD has stayed solid amid ongoing geopolitical uncertainty, while rising crude oil prices have intensified concerns about inflation. Those inflation worries have, in turn, reinforced expectations that the US Federal Reserve could adopt a more hawkish policy stance, further underpinning the greenback and restraining gold.
Middle East Tensions Bolster USD Safe-Haven Appeal
Developments in the Middle East have been a key driver of market sentiment. A drone strike triggered a fire at the Barakah Nuclear Power Plant in the United Arab Emirates (UAE). Separately, Saudi Arabia reported that it had intercepted three drones launched from Iraq and warned that it would take appropriate operational steps in response to any attempt to compromise its sovereignty and security.
At the same time, US President Donald Trump issued a warning to Iran regarding the need to move quickly toward a deal or face severe repercussions. In a post on Truth Social, Trump wrote that the “clock is ticking” and that there “won’t be anything left” if action is not taken soon, adding that “time is of the essence.”
These developments have raised the risk of further escalation in the region and reduced expectations for a US-Iran agreement amid stalled peace efforts. The heightened uncertainty has supported the USD’s status as a reserve currency.
Oil Rally, Fed Expectations, and Yields Weigh on Gold
The US blockade of Iranian ports and the effective closure of the Strait of Hormuz have helped push crude oil prices to a two-week high. Higher energy prices have fed inflation concerns and strengthened expectations for a US rate hike in 2026.
Data from CME Group’s FedWatch Tool indicate that traders are currently assigning more than a 50% probability that the Federal Reserve will raise borrowing costs by the end of this year. This rate outlook has remained supportive of elevated US Treasury yields, favoring USD bulls and acting as a headwind for gold prices.
Taken together, these factors suggest that the path of least resistance for XAU/USD remains tilted to the downside. In this context, any recovery attempts in gold are more likely to attract selling interest, particularly in the absence of significant US macroeconomic releases on Monday.
Key Events Ahead: FOMC Minutes and Global PMIs
Looking forward, market participants are focused on the release of the Federal Open Market Committee (FOMC) Minutes on Wednesday, which will be scrutinized for additional insight into the central bank’s policy outlook. Investors will also watch this week’s global flash PMI data for further signals on economic momentum.
In parallel, incoming geopolitical headlines are expected to remain a key source of volatility across financial markets, shaping USD demand and, by extension, influencing gold price dynamics.
Physical Market Signals: India Discounts and China Premiums
On the physical side, discounts in India climbed to a record level last week, while robust investment demand for physical bullion has kept Chinese premiums above global benchmark prices. Nonetheless, these regional flows may not be sufficient to provide a durable floor for gold in the short term, given the combination of rising tensions involving Iran, persistent inflation concerns, and expectations for a more hawkish Fed stance that continue to lend support to the USD.
Technical Picture: Downtrend Intact for XAU/USD
From a technical perspective, last week’s failure to sustain gains near the 100-day Simple Moving Average (SMA) has reinforced the bearish tone. The market’s acceptance below the $4,500 psychological level signals that the broader downtrend is gaining traction.
Momentum indicators are aligned with this negative bias. The Relative Strength Index (RSI) is hovering near 40, while the Moving Average Convergence Divergence (MACD) remains in negative territory, both pointing to subdued buying interest and validating the near-term bearish outlook for gold.
Immediate attention is centered on a broader support zone defined by the 200-day SMA at $4,352.59. A sustained break below this area would open the door to deeper corrective declines in upcoming sessions. On the upside, the 100-day SMA at $4,790.55 is the first major resistance that bulls would need to reclaim to alleviate current downside pressure.
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