Gold (XAU/USD) trims a part of its intraday losses during the first half of the European session on Monday, though it retains a negative bias for the second straight day and remains below the $4,100 mark. The US Dollar (USD) attracts some intraday sellers and supports the bullion, but any meaningful upside still seems elusive amid a bearish fundamental backdrop.
A further escalation of tensions between the US and Iran, along with the closure of the Strait of Hormuz, lifts crude oil prices and revives inflation fears. This bolsters expectations of higher interest rates by the US Federal Reserve (Fed), which should limit deeper USD losses and continue to undermine demand for the non-yielding bullion.
The US unleashed a major round of strikes on Iran over the weekend, while Iran responded with missile attacks on US military bases in the Gulf. Adding to this, Iran’s Islamic Revolutionary Guard Corps (IRGC) fired on another commercial vessel in the Strait of Hormuz and announced the closure of the critical waterway. This adds a layer of uncertainty to global energy markets and triggers a fresh leg up in crude oil prices, fueling concerns about energy-driven inflationary pressures and reaffirming bets that the US central bank will raise borrowing costs.
According to the CME Group’s FedWatch Tool, traders are currently pricing in a nearly 90% chance of a Fed rate hike by the end of this year. The outlook remains supportive of elevated US Treasury bond yields, assisting the dollar to build on its bounce from a one-week low touched on Friday and exerting downward pressure on non-yielding Gold. USD bulls, however, seem hesitant and are waiting for more cues about the Fed’s policy path, with focus turning to Fed Chair Kevin Warsh’s congressional testimony later this week.
Traders will also take cues from the release of the US Consumer Price Index (CPI) and Producer Price Index (PPI), due on Tuesday and Wednesday respectively. The crucial inflation figures will play a key role in influencing near-term USD price dynamics and provide fresh impetus to the precious metal. The aforementioned fundamental backdrop remains tilted in favor of XAU/USD bears, suggesting that any move higher is more likely to be sold into.
XAU/USD Daily Chart
Technical Outlook: Gold Shows Resilience Below $4,050 but Remains Under Pressure
From a technical perspective, Gold remains well below the 200-day Simple Moving Average (SMA) and maintains a bearish bias within a downward-sloping parallel channel. The Relative Strength Index (RSI) hovers near 40, and the Moving Average Convergence Divergence (MACD) histogram, although eased from recent highs, is mildly positive — suggesting only modest downside momentum.
The first notable support is aligned with the $4,000 psychological mark, ahead of the year-to-date low around the $3,942 region. A convincing break below that level would expose the channel’s lower boundary, currently near $3,782.83, where buyers could attempt to stabilize the decline if selling pressure intensifies. On the upside, immediate resistance comes at the channel top near $4,291.51, with a break above that barrier needed to ease the current bearish tone. The 200-day SMA at roughly $4,494.65 stands as a more formidable resistance zone that would need to be reclaimed to signal a more durable bullish reversal.
US Dollar Performance Today
The table below shows the percentage change of the US Dollar (USD) against major currencies. The USD was the strongest against the Japanese Yen.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | -0.22% | 0.01% | 0.26% | -0.13% | 0.16% | -0.39% | -0.12% | |
| EUR | 0.22% | 0.23% | 0.46% | 0.08% | 0.40% | -0.14% | 0.12% | |
| GBP | -0.01% | -0.23% | 0.24% | -0.15% | 0.18% | -0.36% | -0.07% | |
| JPY | -0.26% | -0.46% | -0.24% | -0.40% | -0.10% | -0.61% | -0.32% | |
| CAD | 0.13% | -0.08% | 0.15% | 0.40% | 0.31% | -0.19% | 0.08% | |
| AUD | -0.16% | -0.40% | -0.18% | 0.10% | -0.31% | -0.49% | -0.20% | |
| NZD | 0.39% | 0.14% | 0.36% | 0.61% | 0.19% | 0.49% | 0.29% | |
| CHF | 0.12% | -0.12% | 0.07% | 0.32% | -0.08% | 0.20% | -0.29% |
The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, selecting the US Dollar from the left column and moving to the Japanese Yen column shows the USD/JPY percentage change for the session.
