Gold (XAU/USD) edged lower during the Asian session on Monday, pressured by a hawkish stance from major central banks, including the US Federal Reserve, as concerns mount that energy shocks from Middle East geopolitical tensions could revive inflationary pressures [1]. The US Federal Reserve recently decided to keep its key policy rate unchanged at 3.50%-3.75%, with the highest number of dissents since 1992—three policymakers voted against the accommodative tone in the policy statement [1]. Minneapolis Fed President Neel Kashkari warned that a prolonged Iran conflict could increase inflation risks and economic damage, and he raised the possibility of moving rates higher due to uncertainty surrounding the war [1].
Geopolitical developments also contributed to market uncertainty. US President Donald Trump announced 'Project Freedom' to guide ships stranded in the Gulf through the Strait of Hormuz, warning of forceful action if the process is disrupted. In response, top Iranian lawmaker Ebrahim Azizi stated that any US interference in the strategic waterway would be considered a violation of the ceasefire, while Iran's Islamic Revolutionary Guard Corps accused the US of failing to honor agreements and suggested renewed hostilities are likely [1]. These tensions have limited the downside for crude oil prices and contributed to the cautious sentiment in gold [1].
Recent US macro data released last Thursday indicated that inflation accelerated in March, reinforcing expectations that the Fed could keep rates unchanged well into next year [1]. The hawkish outlook has supported the US Dollar, attracting dip-buyers and further weighing on gold prices [1]. Despite these pressures, gold has shown some resilience below the $4,600 mark, and the lack of follow-through selling suggests caution for XAU/USD bears [1].
From a technical perspective, the Moving Average Convergence Divergence (MACD) remains below the zero line with a negative reading on the 1-hour chart, indicating persistent downside pressure, while the Relative Strength Index (RSI) stands at 49.60 [1]. Investors are now looking ahead to key US macro data, including the closely-watched Nonfarm Payrolls (NFP) report on Friday, for further market direction [1].
CONCLUSION
Gold prices are under pressure from a hawkish Fed and ongoing geopolitical tensions, with technical indicators suggesting continued downside risk. However, the lack of strong selling and upcoming US macro data could influence the next move. The market remains cautious as investors await further signals.