Gold remains depressed as positive risk tone and USD uptick counters Fed rate cut bets

Gold (XAU/USD) remains depressed through the early European session on Monday, though it has managed to rebound from the daily trough and currently trades above the $5,000 psychological mark. Moreover, a combination of supporting factors warrants some caution for aggressive bearish traders, and before positioning for deeper losses.

A modest US Dollar (USD) uptick, along with a generally positive risk tone, exerts some downward pressure on the safe-haven bullion. However, geopolitical risks remain in play ahead of the second round of US-Iran nuclear talks this week. In fact, the US has dispatched a second aircraft carrier to the region and is preparing for the possibility of a sustained military campaign if the talks do not succeed. In response, Iran’s Revolutionary Guards have warned that they could retaliate against any US military base in case of strikes on their territory. This, in turn, could act as a tailwind for the Gold price.

Meanwhile, any meaningful USD appreciation still seems elusive amid dovish Federal Reserve (Fed) expectations, which tends to benefit the non-yielding yellow metal. As investors look past last Wednesday's blowout US Nonfarm Payrolls (NFP) report, softer US consumer inflation figures released on Friday lifted market bets that the US central bank will lower borrowing costs in June. The headline US Consumer Price Index (CPI) rose 0.2%, while the core gauge increased 0.3% last month, which backs the case for further policy easing by the Fed and could help limit the downside for the Gold price.

Furthermore, relatively thin trading volumes on the back of the Presidents Day holiday in the US could further hold back traders from placing aggressive directional bets around the XAU/USD pair. That said, the Fed speak could provide some impetus to the USD and the commodity. The focus, however, will remain glued to the FOMC meeting minutes on Wednesday, which will be looked upon for more cues about the Fed's rate-cut path. Apart from this, traders will take cues from the global flash PMIs on Friday to grab some meaningful opportunities during the latter part of the week.

XAU/USD 1-hour chart

Gold faces rejection near 100-hour SMA pivotal resistance

The XAU/USD pair's inability to find acceptance or build on Friday's move up beyond the 100-period Simple Moving Average (SMA) favors bearish traders. The commodity holds beneath this gauge, which slopes lower and sits near $5,028.40, capping rebounds and preserving a bearish intraday bias. The Moving Average Convergence Divergence (MACD) slips below its signal line and into negative territory, with a widening negative histogram that reinforces downward momentum. The Relative Strength Index (RSI) stands at 45 (neutral), tilting lower and aligning with the soft tone.

Momentum would remain pressured while the XAU/USD pair stays under the declining 100-period SMA, as sub-zero MACD readings and a negative histogram argue for seller control. A recovery attempt would gain traction only if the MACD line crosses back above its signal line and the RSI reclaims 50, as that combination would ease downside pressure and allow a corrective bounce to unfold.

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