Gold falls below $4,500 as geopolitics and hawkish Fed lift USD, reinforcing bearish setup
- Gold remains on the back foot below a two-week high amid a combination of factors.
- Geopolitical risks revive demand for the safe-haven USD and cap the precious metal.
- Hawkish Fed bets further act as a headwind for the commodity amid a bearish setup.
Gold (XAU/USD) extends its steady intraday descent through the first half of the European session and retreats further from the vicinity of the $4,600 mark, or a two-week high set on Friday. Persistent geopolitical uncertainties, along with hawkish Federal Reserve (Fed) expectations, assist the US Dollar (USD) in regaining positive traction. This, in turn, is seen as a key factor exerting pressure on the commodity, dragging it further below the $4,500 psychological mark. The precious metal, however, holds well above a two-month low touched last Thursday, as traders might opt to wait for further progress in US-Iran peace talks.
Iran's Foreign Minister, Abbas Araqchi, told state media on Sunday that talks and message exchanges with the US are ongoing, though he cautioned against reading too much into unconfirmed reports about the negotiations. Earlier, Iran’s chief negotiator, Mohammad Bagher Qalibaf, stated that the country will not accept any agreement until its national rights are fully secured. Apart from this, reports suggest that the US had hardened its negotiating position with Iran, raising fresh uncertainty over diplomatic efforts to end a three-month-old conflict in the Middle East.
Moreover, differences over Iran's nuclear program and the Strait of Hormuz continue to complicate efforts to reach a deal. US President Donald Trump reportedly requested that edits related to the strategic waterway and enriched uranium be made to the US-Iran deal aimed at bringing an end to the fighting. Proposals are still being exchanged through Pakistani and other regional mediators, but it remains unclear if the sides are making much progress. Meanwhile, Israel expanded its ground assault in Lebanon in the battle with the Iranian-backed Hezbollah militant group.
Reuters reported that Israeli forces seized the 900-year-old Beaufort Castle and are now operating past the Litani River. This expansion marks Israel’s deepest incursion into Lebanon since its withdrawal in the year 2000 and keeps geopolitical risk premium in play, underpinning the safe-haven USD. Meanwhile, the latest development triggers a goodish recovery in Crude Oil prices from over a one-month low, touched on Friday. This revives inflation fears and bolsters Fed rate hike bets. This further benefits the buck and contributes to capping the non-yielding Gold.
The market attention now shifts to the important US macro data, scheduled at the start of a new month. A rather busy week kicks off with the release of the US ISM Manufacturing PMI, due later today. The focus, however, will be on the crucial US Nonfarm Payrolls (NFP) report on Friday, which could influence market expectations about the Fed's policy path and drive the USD demand in the near term. Apart from this, developments surrounding the Middle East crisis might continue to infuse volatility across the global financial markets and influence the Gold price.
XAU/USD daily chart
Gold seems vulnerable to slide further as intraday break below $4,500 comes into play
From a technical perspective, the XAU/USD pair is holding a bearish near-term bias as it remains trapped inside a downward parallel channel and below the 50-day Simple Moving Average (SMA). Moreover, moderating Moving Average Convergence Divergence (MACD) histogram together with a sub-50 Relative Strength Index (RSI) around 44 suggest rallies are likely to be sold while momentum stays soft.
However, the commodity last week showed some resilience below the very important 200-day SMA, which still underpins the broader uptrend. This makes it prudent to wait for a convincing break and acceptance below the said MA at $4,411.29 before positioning for a fall towards the channel support near $4,303.42. On the topside, immediate resistance is clustered around the channel’s upper boundary near $4,627.52, reinforced by the 50-day SMA at $4,628.82. A sustained break above this confluence would be needed to ease the current downside pressure.
(The technical analysis of this story was written with the help of an AI tool.)
US Dollar Price Today
The table below shows the percentage change of US Dollar (USD) against listed major currencies today. US Dollar was the strongest against the New Zealand Dollar.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | -0.00% | -0.15% | 0.13% | 0.12% | 0.01% | 0.41% | 0.31% | |
| EUR | 0.00% | -0.13% | 0.09% | 0.13% | 0.08% | 0.43% | 0.30% | |
| GBP | 0.15% | 0.13% | 0.24% | 0.26% | 0.15% | 0.54% | 0.40% | |
| JPY | -0.13% | -0.09% | -0.24% | 0.02% | -0.08% | 0.32% | 0.16% | |
| CAD | -0.12% | -0.13% | -0.26% | -0.02% | -0.11% | 0.29% | 0.15% | |
| AUD | -0.01% | -0.08% | -0.15% | 0.08% | 0.11% | 0.34% | 0.24% | |
| NZD | -0.41% | -0.43% | -0.54% | -0.32% | -0.29% | -0.34% | -0.14% | |
| CHF | -0.31% | -0.30% | -0.40% | -0.16% | -0.15% | -0.24% | 0.14% |
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, if you pick the US Dollar from the left column and move along the horizontal line to the Japanese Yen, the percentage change displayed in the box will represent USD (base)/JPY (quote).
Author
Haresh Menghani
FXStreet
Haresh Menghani is a detail-oriented professional with 10+ years of extensive experience in analysing the global financial markets.
