Gold (XAU/USD) declined during the North American session on Monday, trading at $4,673 and marking a 0.75% drop, as the US Dollar regained strength and risk appetite weakened due to stalled US-Iran negotiations [1]. The lack of progress in talks, with Iran proposing a three-stage process to resolve the war, the Strait of Hormuz issue, and nuclear discussions, has kept geopolitical tensions elevated. Despite Iran's willingness to reopen the Strait of Hormuz if the US lifts the blockade on Iranian ports, US President Donald Trump dismissed Iran's latest offer as insufficient and canceled his envoy's trip to Pakistan, calling it a waste of time [1].
The gold market faced additional pressure from rising US Treasury yields, with the 10-year yield up 3.5 basis points to 4.342%, and expectations that the Federal Reserve will keep interest rates higher for longer, as reflected in swaps market pricing for steady rates through 2026 [1]. This environment has diminished gold's appeal as an inflation hedge, outweighing its traditional safe-haven role. Traders are now focused on the upcoming Federal Reserve monetary policy meeting, which will conclude with Chair Jerome Powell's final press conference as Fed chief. Powell's tenure as Chairman ends on May 15, but his term at the Fed continues until January 31, 2028 [1].
Despite the current bearish momentum, as indicated by the Relative Strength Index (RSI), analysts surveyed in a Reuters poll have revised up their gold price forecasts, citing strong central bank demand and ongoing economic uncertainty as factors expected to offset risks from inflation and hawkish Fed policy amid Middle East tensions. The median forecast now sees gold ending 2026 at $4,916, up from $4,746.50 three weeks ago [1]. Technical analysis shows gold consolidating below $4,700, with resistance at the 20- and 100-day SMAs ($4,729 and $4,733), and the first support level at $4,650 [1].
Looking ahead, market participants are watching for US economic data releases, including the ADP Employment Change 4-week average, housing data, and the Conference Board Consumer Confidence survey for April, which could further influence gold's direction [1].
CONCLUSION
Gold prices have come under pressure due to higher US yields, a stronger Dollar, and ongoing geopolitical uncertainty surrounding US-Iran negotiations. While technical and market indicators suggest further downside risk, analyst forecasts remain optimistic for gold's longer-term outlook, supported by central bank demand and economic uncertainty.