Gold lacks bullish conviction near $4,200 as Fed hike bets and Iran risks underpin USD
- Gold snaps a three-day losing streak to over a one-week low, though it lacks bullish conviction.
- Easing concerns about inflation and higher interest rates offer some support to the commodity.
- The Iran uncertainty and a hawkish Fed underpin the USD, capping gains for the precious metal.
Gold (XAU/USD) maintains its bid tone near the $4,200 mark through the first half of the European session on Monday and, for now, seems to have snapped a three-day losing streak, to a more than one-week low set the previous day. Crude Oil prices turn lower after mediators – Qatar and Pakistan – announced a formal 60-day roadmap aimed at securing a final US-Iran peace deal. This helps ease concerns around inflation and higher interest rates, offering some support to the precious metal.
That said, traders are still pricing in a nearly 90% chance that the US Federal Reserve (Fed) will raise borrowing costs by the end of this year. The bets were lifted by the Fed's hawkish forecast last week, signaling that it will need to raise the policy rate this year if inflation remains sticky. Furthermore, the new Fed Chair, Kevin Warsh, focused on price stability during the post-meeting press conference, suggesting that the central bank might not rush to cut rates even in the face of declining growth. Apart from this, geopolitical developments over the weekend act as a tailwind for the US Dollar (USD), which should cap further gains for the Gold.
Iran accused the US and Israel of violating the ceasefire and announced that it had again closed the Strait of Hormuz, citing the continued Israeli strikes in Lebanon. Moreover, US President Donald Trump threatened fresh military action against Iran if Hezbollah continued attacks on Israel. This underscores the fragility of the diplomatic process and keeps the geopolitical risk premium in play. Adding to this, Russia has intensified attacks on major Ukrainian cities in recent weeks, which helps the safe-haven Greenback to stall Friday's pullback from its highest level since May 2025 and keeps a lid on the Gold, warranting caution for bulls.
Moving ahead, all eyes remain on US-Iran headlines, which might continue to infuse volatility across global financial markets. Apart from this, comments from influential FOMC members will drive the USD demand and provide some impetus to the precious metal. Nevertheless, the aforementioned fundamental backdrop suggests that an attempted recovery might still be seen as a selling opportunity and fizzle out rather quickly.
XAU/USD daily chart
Gold bulls seem hesitant; 200-day EMA holds the key
From a technical perspective, last week's failed attempts to clear the 200-day Exponential Moving Average (EMA) support-turned-resistance, and the subsequent fall, favor the XAU/USD bears. Moreover, the Relative Strength Index (RSI) hovers in the upper-30s, hinting at subdued buying interest. Adding to this, the Moving Average Convergence Divergence (MACD) remains in negative territory with a modestly negative histogram, suggesting that downside momentum is easing but not yet reversed.
Meanwhile, the 200-day EMA near $4,334 should act as the first key level that bulls need to reclaim to alleviate the current bearish pressure. Until that level is recovered on a daily closing basis, rebounds are likely to be viewed as corrective within a broader consolidative decline, with momentum signals implying that further tests of lower levels cannot be ruled out.
(The technical analysis of this story was written with the help of an AI tool.)
US Dollar Price Last 7 Days
The table below shows the percentage change of US Dollar (USD) against listed major currencies last 7 days. US Dollar was the strongest against the New Zealand Dollar.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | 1.15% | 1.68% | 1.00% | 1.33% | 0.68% | 1.88% | 1.57% | |
| EUR | -1.15% | 0.49% | -0.15% | 0.17% | -0.50% | 0.71% | 0.41% | |
| GBP | -1.68% | -0.49% | -0.81% | -0.32% | -0.99% | 0.22% | -0.08% | |
| JPY | -1.00% | 0.15% | 0.81% | 0.31% | -0.34% | 0.90% | 0.55% | |
| CAD | -1.33% | -0.17% | 0.32% | -0.31% | -0.68% | 0.59% | 0.24% | |
| AUD | -0.68% | 0.50% | 0.99% | 0.34% | 0.68% | 1.22% | 0.91% | |
| NZD | -1.88% | -0.71% | -0.22% | -0.90% | -0.59% | -1.22% | -0.30% | |
| CHF | -1.57% | -0.41% | 0.08% | -0.55% | -0.24% | -0.91% | 0.30% |
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.
