Gold Price Forecast: Bears have the upper hand amid inflation-driven hawkish central banks

Gold (XAU/USD) meets with a fresh supply at the start of a new week and weakens further below the $4,600 mark, back closer to Friday's swing low, during the early part of the European session. The US-Iran impasse over the Strait of Hormuz continues to fuel uncertainty over diplomatic efforts to end the war and remains supportive of elevated Crude Oil prices. Investors now seem convinced that major central banks. This, in turn, is seen as a key factor undermining demand for the non-yielding yellow metal.

In the latest developments surrounding the Middle East crisis. US President Donald Trump announced a new initiative to guide ships stranded in the Gulf under a program called "Project Freedom". Trump also warned that if this process is disrupted, it will be dealt with forcefully. In response, top Iranian lawmaker Ebrahim Azizi said any US interference in the strategic waterway will be considered a violation of the ceasefire. Furthermore, Iran's Islamic Revolutionary Guard Corps (IRGC) accused the US of failing to honour agreements and said that renewed hostilities are likely. This raises the risk of a further escalation of geopolitical tensions amid the lack of progress in US-Iran peace talks and assists Crude Oil prices to reverse a modest bearish gap opening.

This comes on top of the US data released last week, which showed that inflation accelerated in March and should encourage the Fed to hold interest rates higher for longer. The expectations were reaffirmed by the US central bank's hawkish pause last week that saw the highest number of dissents since 1992. In fact, three members voted against the accommodative tone in the policy statement. Moreover, Minneapolis Fed President Neel Kashkari said on Sunday that a prolonged Iran conflict increases inflation risks and economic damage. Kashkari also raised the possibility of moving rates higher, citing uncertainty around all aspects of the war. This, in turn, offers some support to the US Dollar (USD), which exerts additional pressure on the Gold price.

There isn't any relevant market-moving economic data due for release from the US on Monday, leaving the USD at the mercy of the incoming geopolitical headlines and comments from influential FOMC members. Meanwhile, the focus will be on this week's key macro releases, scheduled at the start of a new month, including the closely-watched Nonfarm Payrolls (NFP) report on Friday. The latter could provide some meaningful impetus to the buck and the Gold price. In the meantime, the fundamental backdrop seems tilted in favor of bearish trades and suggests that the path of least resistance for the XAU/USD pair is to the downside.

XAU/USD 1-hour chart

Technical Analysis:

Against the backdrop of Friday's failure near the $4.650-$4,655 confluence, a subsequent fall and acceptance below the $4,600 mark could be seen as a fresh trigger for bears. Adding to this, the Relative Strength Index (RSI) at 39.47 leans toward bearish territory, while the Moving Average Convergence Divergence (MACD) remains negative and below the zero line. Momentum indicators together point to persistent downside pressure and room for further losses before conditions become oversold.

From current levels, the main structural support comes in near $4,512.28, where a break would expose a deeper corrective phase in the broader bullish cycle. On the topside, initial resistance is seen at the 23.6% Fibonacci retracement of the downfall from the April swing high at $4,600.83. This is followed by the $4,660-$4,655 confluence – comprising the 38.2% retracement and the 200-period Exponential Moving Average (EMA), with higher hurdles at the 50.0% level at $4,699.88 and the 61.8% retracement at $4,744.15.

(The technical analysis of this story was written with the help of an AI tool.)