Gold Holds Near $4,000 as Fed, Mideast Risks Steady Prices

Key Moments

Geopolitical Tensions Support USD and Cap Gold

Gold (XAU/USD) is seeing only limited buying interest at the start of the week, with prices hovering around the $4,000 psychological level and little changed heading into the European session on Monday. Initial dip-buying has failed to gain meaningful traction as support for the US Dollar (USD) from geopolitical risks and interest rate expectations continues to restrain the metal’s recovery and keeps sentiment tilted toward sellers.

Developments in the Middle East remain at the forefront for market participants. The United States said it had completed a ninth consecutive night of strikes against Iran on Sunday, following the announcement of another American service member’s death in Iraq. US President Donald Trump stated that the latest strikes were being conducted in honor of US service members killed in recent days. Separately, the US Central Command noted on X that the operations are intended to weaken Iranian military capabilities used to target commercial shipping and civilian mariners passing through the Strait of Hormuz.

In retaliation, Iran launched ballistic missiles and one-way attack drones against US-aligned countries in the region. Bahrain, Jordan, Kuwait, and Iraq all reported a fresh round of attacks. These actions heighten the prospect of a wider regional conflict and sustain a geopolitical risk premium in markets.

Oil Price Surge Stokes Inflation Fears and Fed Hike Bets

The backdrop is being further complicated by disruptions around key maritime routes and energy exports. The article notes that the US has recently reinstated a naval blockade of Iranian ports and has restricted an earlier oil-selling license. On the other side, the Islamic Revolutionary Guard Corps (IRGC) is described as aggressively overseeing and attempting to limit vessel movements through the Strait of Hormuz.

These factors have pushed crude oil prices to their highest level since June 12, intensifying worries about inflation. Rising energy costs are reinforcing expectations that US interest rates may need to move higher in 2026. Supporting that view, Cleveland Fed President Beth Hammack said on Friday that rates may have to increase further to counter persistent inflation pressures. This stance underpins the USD and argues for caution among Gold bulls, as a firmer Dollar and the prospect of higher rates generally weigh on non-yielding assets like Gold.

Limited Data, Focus on Fed Speakers and Headlines

With no significant US economic releases scheduled for Monday, there is little in the way of fresh macro data to shift the broader narrative. Against this backdrop, the article suggests that it is prudent to wait for convincing follow-through buying before concluding that XAU/USD has carved out a near-term floor.

Comments from influential Federal Open Market Committee (FOMC) members could provide some direction for the USD and, by extension, for Gold. In addition, incoming headlines around the US-Iran confrontation and broader regional developments are expected to inject volatility into financial markets and create short-term trading setups in the precious metals space.

Technical Picture: Downtrend Channel and Key Levels

From a chart-based perspective, Gold is trading within a downward-sloping channel and remains below its 200-day Simple Moving Average (SMA), situated near $4,495.79. This configuration continues to favor a bearish outlook despite recent signs of stabilization. XAU/USD is currently positioned just beneath the upper boundary of this descending channel, around $4,056.51, indicating that rallies are still being contained within the corrective pattern.

Momentum indicators show a mixed but cautious tone. The Moving Average Convergence Divergence (MACD) is modestly positive, suggesting that the latest rebound has some upside strength but not a dominant one. At the same time, the Relative Strength Index (RSI) remains below the 50 mark, reflecting mildly negative momentum.

Given this setup, a clear and sustained break above the channel resistance would be required to signal a more meaningful recovery and open a path toward the distant 200-day SMA, near $4,495.79.

On the downside, the lower band of the descending channel, around $3,662.99, stands out as the next major support level. A move back toward this area would underscore the prevailing bearish structure, and a decisive breach of that support could leave Gold vulnerable to additional downside.

Key Technical Levels for XAU/USD