Gold Holds Modest Gains as Fed Bets and Iran Risks Loom

Key Moments

Gold Attempts Recovery but Lacks Strong Bullish Follow-Through

Gold (XAU/USD) has interrupted a three-day decline that had driven prices to their lowest level in more than a week, staging a rebound to above $4,200. The move marks the first session in four with a positive tone, although the metal has already surrendered a portion of its intraday advance and is not showing clear bullish conviction.

Crude Oil prices have turned lower after starting the week with a modest upward gap, following news that mediators Qatar and Pakistan unveiled a formal 60-day roadmap intended to secure a final peace agreement between the US and Iran. That development has eased some concerns about inflation and sustained high interest rates, providing a degree of support to gold. Even so, the metal continues to trade close to the more than one-week trough reached on Friday.

Fed Rate Expectations and Geopolitics Support the Dollar

Market pricing indicates that participants are assigning nearly a 90% probability that the US Federal Reserve will raise interest rates before the end of this year. Those expectations were reinforced by the Fed’s hawkish outlook last week, which indicated that an additional rate increase would be needed if inflation does not moderate.

The stance was underlined by new Fed Chair Kevin Warsh, who emphasized the priority of price stability in the post-meeting press conference. His comments suggested that the central bank is unlikely to move quickly toward rate cuts even if economic growth slows. This backdrop, together with fresh geopolitical headlines over the weekend, has supported the US Dollar and is restraining further gains in gold.

Iran has accused the US and Israel of breaching the ceasefire and stated that it had once again closed the Strait of Hormuz, citing continued Israeli strikes in Lebanon. In parallel, US President Donald Trump warned of additional military action against Iran if Hezbollah maintains its attacks on Israel. These developments highlight the delicate nature of the diplomatic process and keep a geopolitical risk premium embedded in markets.

At the same time, Russia has stepped up attacks on major Ukrainian cities in recent weeks. That escalation has helped the safe-haven US Dollar halt Friday’s pullback from its strongest level since May 2025. The firmer Greenback, in turn, is constraining upside in gold and argues for caution among bullish traders.

Market Focus: US-Iran Headlines and Fed Speakers

Looking ahead, investors are closely tracking news related to US-Iran relations, as further announcements or surprises have the potential to drive volatility across global assets. In addition, remarks from influential Federal Open Market Committee (FOMC) members are expected to shape demand for the US Dollar and, by extension, influence trading in gold.

Given the prevailing macro and geopolitical configuration, attempts by gold to extend its recovery are likely to be viewed as corrective in nature. The current backdrop suggests that rallies could attract selling interest and fade relatively quickly.

Technical View: Bears Retain Control Below 200-Day EMA

From a technical standpoint, gold’s failure last week to sustain a break above the 200-day Exponential Moving Average – which has turned from support into resistance – and the subsequent decline leave the advantage with sellers. The Relative Strength Index is hovering in the upper-30s, pointing to restrained buying appetite.

The Moving Average Convergence Divergence indicator remains in negative territory, with a modestly negative histogram, signaling that while downside momentum has moderated, it has not yet reversed.

The 200-day EMA, located near $4,334, stands out as the first significant technical threshold that buyers need to recapture on a daily closing basis to relieve current downside pressure. Until that barrier is overcome, rebounds are likely to be interpreted as counter-trend moves within a broader consolidative decline, and further tests of lower price levels remain a risk.