Gold (XAU/USD) rose during the Asian session on Tuesday, supported by ongoing geopolitical risks stemming from the escalating conflict between Israel and Hezbollah in Lebanon, as well as continued attacks by Iran on civilian infrastructure in six Gulf states, including airports, ports, oil facilities, and commercial hubs [1]. The disruption of shipping through the Strait of Hormuz, a key chokepoint for a fifth of global oil supply, has kept crude prices elevated and fueled inflationary concerns [1]. These inflation fears have tempered expectations for US Federal Reserve rate cuts and could even prompt consideration of rate hikes, which in turn has capped gains for the non-yielding precious metal [1].
The hawkish implications of the Middle East conflict have revived demand for the US Dollar (USD), following a pullback from its highest level since May 2025, contributing to limited upside for XAU/USD [1]. However, USD bulls appear cautious ahead of the outcome of a two-day FOMC meeting scheduled for Wednesday, as well as policy updates from other major central banks, including the European Central Bank (ECB), Bank of Japan (BoJ), and Bank of England (BoE), which are expected to provide further direction for gold later in the week [1].
Technical analysis indicates that gold remains vulnerable, with a breakdown below the 200-period Simple Moving Average (SMA) and the 38.2% Fibonacci retracement level of the February-March move up favoring bearish momentum [1]. The MACD indicator remains below zero, signaling persistent downside momentum, while the Relative Strength Index (RSI) at 41 suggests sellers retain the initiative [1]. Immediate resistance is noted at the 38.2% Fibo. retracement near $5,040, followed by the 200-period SMA around $5,063, with a break above this zone needed to ease bearish pressure. On the downside, initial support is at the psychological $5,000 area, ahead of recent lows near $4,995–$4,985, with further retracement possible toward the 50.0% retracement level at $4,921 [1].
CONCLUSION
Gold's price action remains heavily influenced by ongoing Middle East tensions and inflationary pressures, which have limited its upside despite safe-haven demand. Technical indicators suggest continued vulnerability for XAU/USD, with key resistance and support levels in focus. Market participants are awaiting central bank policy updates for further direction.