Gold (XAU/USD) regained ground on Monday after opening lower, trading around $4,732 and rebounding from an intraday low near $4,632, but lacked strong upside momentum amid escalating tensions between the United States and Iran [1]. The risk-off sentiment in markets intensified as optimism from last week's two-week ceasefire faded following unsuccessful US-Iran talks in Islamabad over the weekend. In response, US President Donald Trump ordered a naval blockade of the Strait of Hormuz, with US Central Command (CENTCOM) confirming that the blockade would apply to all vessels entering or leaving Iranian ports in the Arabian Gulf and Gulf of Oman, beginning Monday at 10:00 ET (14:00 GMT) [1]. Iran’s Islamic Revolutionary Guard Corps (IRGC) warned that any military vessels approaching the Strait would be considered a ceasefire breach and could face a strong response [1].
The heightened geopolitical risk has led to concerns about prolonged disruptions to global energy supplies, causing crude prices to climb. West Texas Intermediate (WTI) crude is trading around $97, up roughly 7.5% at the time of writing [1]. Elevated oil prices are fueling inflation concerns and strengthening expectations that the Federal Reserve (Fed) will keep interest rates higher for longer, or potentially raise them further if the conflict persists. This has kept the US Dollar (USD) and Treasury yields broadly supported [1]. Recent US inflation data for March showed headline CPI rising by 0.9% month-on-month from 0.3% in February, with the annual rate increasing to 3.3% year-on-year from 2.4% [1].
Despite gold’s reputation as an inflation hedge and safe-haven asset, it has struggled to attract meaningful buying interest since the conflict began, as the higher interest rate outlook increases the opportunity cost of holding the non-yielding metal. However, the broader outlook for gold remains supported by steady central bank buying, fading confidence in fiat currencies, rising sovereign debt levels in major economies, and resilient investment demand [1].
Looking ahead, the US economic calendar is relatively light, with the main focus on the Producer Price Index (PPI) for March due on Tuesday. Several Fed officials are also scheduled to speak throughout the week, which could provide further guidance on the interest rate outlook [1]. Technically, XAU/USD is consolidating between key moving averages, holding above the 100-day SMA at $4,687.11 and well above the 200-day SMA near $4,185.66, but capped below the 50-day SMA at $4,899.26. Momentum indicators point to a lack of strong direction, keeping the broader bias neutral with a slight downside tilt as price consolidates between these levels [1].
CONCLUSION
Gold remains steady but lacks momentum as US-Iran tensions and rising oil prices fuel inflation concerns and support expectations for higher US interest rates. The market is closely watching upcoming US economic data and Fed commentary for further direction. Elevated geopolitical risks and inflationary pressures continue to drive volatility across commodities and currencies.