Gold (XAU/USD) began the week with modest gains, trading around $4,050 and up 0.20% on the day after reaching an intraday high of $4,084. However, buyers showed limited conviction as markets digested conflicting headlines regarding US-Iran relations and anticipated key US employment data for further guidance on Federal Reserve policy direction [1]. Over the weekend, US President Donald Trump announced he had called off a planned strike on Iran, with negotiations expected to start on Monday. This development raised hopes for a peace deal and led to a sharp decline in Oil prices, with West Texas Intermediate (WTI) dropping more than 7% at the time of writing [1]. Despite this pullback, Oil prices remained above pre-war levels due to ongoing supply disruptions through the Strait of Hormuz [1].
Iranian Foreign Ministry spokesperson Esmaeil Baghaei stated that Tehran is not currently holding talks with Washington, which kept traders skeptical about the prospects for a deal and the full reopening of the Strait. As a result, broader inflation concerns persisted, and market participants continued to anticipate a high likelihood of the Federal Reserve raising interest rates this year [1]. New York Fed President John Williams commented that 'rate policy is still well positioned to reach 2% inflation,' and emphasized that the Fed would intervene if inflation does not stay on track to 2% [1]. According to the CME FedWatch Tool, traders see a 65% chance of a rate hike in September, with these hawkish expectations capping Gold’s upside despite general weakness in the US Dollar, which has been influenced by Japanese intervention to support the Yen [1].
Looking ahead, the US economic calendar features several key releases, including the ISM Manufacturing PMI, JOLTS Job Openings, ADP Employment Change, and Nonfarm Payrolls (NFP) later in the week, all of which could impact market sentiment and Fed policy expectations [1].
From a technical perspective, Gold remains under pressure, trading below its 21-day, 50-day, and 100-day Simple Moving Averages (SMAs). The Relative Strength Index (RSI) has recovered toward neutral at 46, while the Average Directional Index (ADX) at 27 suggests easing trend strength after the recent decline. Immediate resistance is noted at the 21-day SMA near $4,066, with further barriers at the 50-day SMA ($4,175) and 100-day SMA ($4,416). On the downside, support is seen at $4,000 and then at $3,850, with a daily close below $4,000 likely to open the way for further losses [1].
CONCLUSION
Gold prices are struggling to maintain gains amid mixed geopolitical signals and a hawkish Federal Reserve outlook. Persistent inflation concerns and the prospect of further rate hikes continue to limit upside potential for Gold, while technical indicators suggest a consolidative phase above key support levels.