Gold (XAU/USD) posted solid gains of almost 1% on Monday, trading at $4,530 after rebounding from daily lows of $4,418, as declining US Treasury yields lifted bullion demand despite a strong US Dollar Index (DXY), which rose 0.29% to 100.48 [1]. The 10-year US Treasury note yield dropped nearly 9 basis points to 4.34%, reflecting increased market expectations for a Federal Reserve rate cut, even as money markets anticipate the Fed will hold rates in 2026, with the first cut projected for mid-2027 [1].
Geopolitical tensions in the Middle East have pushed energy prices higher, with West Texas Intermediate (WTI) crude oil extending gains for the fourth consecutive day, up more than 1.30% to $100.39 per barrel [1]. While higher oil prices typically support the US Dollar, they also contributed to gold's rise, as traders speculated that prolonged conflict could weigh on economic growth and pressure central banks to hold or reduce interest rates [1].
Fed Chair Jerome Powell, in an interview at Harvard University, reaffirmed the central bank's commitment to returning inflation to 2%, noting that tariffs have contributed a one-time 0.5% to 1% increase in inflation. Powell described monetary policy as well-positioned and acknowledged that Middle East events are impacting gas prices, but stated that long-term inflation expectations remain stable. He indicated that officials may respond if conflicts affect inflation or expectations [1]. Conversely, Fed Governor Stephen Miran said inflation expectations have not yet been affected by elevated oil prices, and there is no evidence of a wage-price spiral, making such an outcome extremely unlikely [1].
On the technical front, gold is trading sideways below the 100-day Simple Moving Average (SMA) at $4,610, with the Relative Strength Index (RSI) showing sellers still in charge but buyers beginning to emerge as the index approaches the 50-neutral level. If XAU/USD clears the 100-day SMA, the next area of interest would be higher, but for now, gold is poised to post losses of more than 10% in March [1].
CONCLUSION
Gold's nearly 1% rise was driven by falling US Treasury yields and ongoing Middle East tensions, despite a strong US Dollar and higher oil prices. Market participants are increasingly betting on future Fed rate cuts, though officials remain cautious about inflation risks. Technical indicators suggest gold may continue to trade sideways unless a clear catalyst emerges.