On Monday, gold (XAU/USD) is struggling to hold its ground, partially retracing earlier gains amid escalating tensions in the Middle East and a reassessment of rate expectations that are strengthening the dollar.
Earlier in the day, the metal received support from a decline in US Treasury yields after recently reaching multi-month highs; however, yields remain elevated overall, and the US dollar continues to strengthen moderately, limiting the XAU/USD pair's growth potential. Markets are simultaneously reassessing the Federal Reserve's policy trajectory: while earlier increases in oil prices heightened expectations for tightening, investors are increasingly concerned that high energy prices will begin to suppress economic growth.
According to CME FedWatch, market participants expect the Fed's interest rate to remain in the range of 3.50% to 3.75% until the end of 2026. Against this backdrop, a noticeable recovery in gold appears less likely, and the ongoing prospect of high rates increases the opportunity costs of holding the asset.
On Monday, Jerome Powell stated that the policy is "in good shape" to await further developments and assess them correctly, noting the uncertainty regarding the economic implications of ongoing events. He also confirmed that the Fed's policy aims to bring inflation back to its 2% target.
On the geopolitical front, the conflict between the US and Israel with Iran continues to expand, despite reports of negotiations. Over the weekend, Iranian-backed Houthis launched missile and drone attacks on Israel, heightening fears of possible attacks on vessels in the Red Sea and additional risks to global trade and oil supplies via the Strait of Hormuz.
US President Donald Trump stated that "significant progress" has been made in negotiations with Iran and that a deal is "likely" to be reached, but warned of a strong US response in case of a breakdown in dialogue. Against this backdrop, reports of the Pentagon preparing for weeks of ground operations and increasing the US military presence in the region keep nervousness high in commodity and currency markets.
Investor focus this week remains on US data, primarily the March PMI for the manufacturing sector and the non-farm payroll (NFP) report. These reports could provide a new impulse for the dollar and, consequently, for gold dynamics.
From a technical perspective, the short-term trend for XAU/USD is becoming neutral as prices return to the 100-day simple moving average (SMA) after bouncing off the 200-day SMA last week. However, the relative strength index (RSI) in the negative zone fluctuates around the 40 mark, bouncing off the oversold territory, suggesting weakening selling pressure.
Meanwhile, the MACD indicator remains in the negative zone, but the weakening histogram suggests a decline in downward momentum.
In the event of a breakout above the 100-day SMA near $4630, the path opens toward the 50-day SMA. If a decline occurs, the nearest support is in the range of $4400-$4300, followed by the 200-day moving average.