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Gold bounces off 200-day SMA, four-month low as bears turn cautious amid oversold conditions

  • Gold prolongs its downtrend for the fourth day and drops to a fresh YTD low at the start of a new week.
  • Major central banks adopt a hawkish stance amid inflation concerns and weigh on the commodity.
  • Rising geopolitical tensions could support the safe-haven XAU/USD, though the upside seems limited.

Gold (XAU/USD) bounces off a technically significant 200-day Simple Moving Average (SMA) during the first half of the European session on Monday and trims a part of its heavy intraday losses to a four-month low. Any meaningful recovery, however, still seems elusive in the wake of hawkish stances from major central banks, which tend to undermine demand for the non-yielding yellow metal.

The Bank of Japan (BoJ) maintained ​its bias toward monetary policy normalization and warned that surging Crude Oil prices driven by the Middle East conflict could exacerbate inflationary pressures. Adding to this, the Bank of England (BoE) signaled a hawkish shift and potential interest rate hikes as early as April due to inflation stemming from the Iran war. Furthermore, the European Central Bank's (ECB) hawkish messaging suggested that policymakers were prepared to act as soon as April 30 if price pressures intensify due to rising geopolitical tensions.

Meanwhile, the US Federal Reserve (Fed) raised the year-end inflation outlook (PCE), citing risks from higher energy prices due to the Iran war, and projected only one interest rate reduction this year, and one in 2027. This remains supportive of elevated US Treasury bond yields and continues to act as a tailwind for the US Dollar (USD), which turns out to be another factor exerting downward pressure on the Gold price. However, a further escalation of geopolitical tensions lend some support to the safe-haven precious metal amid extremely overbought conditions.

In the latest developments, US President Donald Trump issued a 48-hour deadline for Iran to reopen the Strait of Hormuz and threatened to target Iran's energy infrastructure if the demand is not met. Iran responded by threatening to escalate strikes on energy infrastructure and target critical water desalination facilities across the Middle East, should Trump make good on a promise to “obliterate” the country’s power plants. This, in turn, makes it prudent to wait for acceptance below the $4,100 mark before positioning for any further depreciating move.

XAU/USD daily chart

Chart Analysis XAU/USD

Gold defends 200-day SMA pivotal support amid extremely oversold daily RSI

The near-term bias turns bearish as the XAU/USD pair extends a sharp decline away from the recent $5,300 area and tests the rising 200-day Simple Moving Average (SMA) near $4,095, which acts as the next dynamic support gauge. The Moving Average Convergence Divergence (MACD) indicator (12, 26, 9) remains below the signal line and deep in negative territory, with an expanding negative histogram that reinforces persistent downward momentum.

However, the Relative Strength Index (RSI) at 24 signals oversold conditions, but its steady slide from above 60 indicates firm selling pressure rather than an immediate stabilization. Initial resistance emerges at the $4,500 region, where prior price action consolidated before the latest breakdown, followed by a stronger barrier near $4,820, aligning with a recent swing low that turned lower high on the way down.

On the downside, immediate support is located around the 200-day SMA at $4,095, and a clear break below this level would expose the $4,000 psychological area as the next support. A sustained recovery above $4,500 would be needed to ease the current bearish tone and open the way back toward $4,820, while failure to hold above $4,095 keeps the path open for deeper losses toward $4,000.

(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 Australian Dollar.

USDEURGBPJPYCADAUDNZDCHF
USD0.33%0.20%0.05%-0.01%0.72%0.61%0.26%
EUR-0.33%-0.14%-0.22%-0.34%0.51%0.27%-0.08%
GBP-0.20%0.14%-0.11%-0.21%0.65%0.40%0.05%
JPY-0.05%0.22%0.11%-0.05%0.66%0.47%0.19%
CAD0.00%0.34%0.21%0.05%0.70%0.48%0.22%
AUD-0.72%-0.51%-0.65%-0.66%-0.70%-0.23%-0.45%
NZD-0.61%-0.27%-0.40%-0.47%-0.48%0.23%-0.31%
CHF-0.26%0.08%-0.05%-0.19%-0.22%0.45%0.31%

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

Haresh Menghani is a detail-oriented professional with 10+ years of extensive experience in analysing the global financial markets.

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