Gold (XAU/USD) trims gains after opening the week with a bullish gap as buyers lack conviction amid conflicting US-Iran headlines and caution ahead of key US employment data.
The announcement lifted hopes of a peace deal and sent Oil prices sharply lower, with West Texas Intermediate (WTI) down more than 8% at the time of writing.
The pullback in Oil prices eases immediate inflation concerns and pulls US Treasury yields lower, offering support to Gold.
However, supply disruptions through the Strait of Hormuz keep Oil prices above pre-war levels.
These hawkish bets continue to cap Gold’s upside despite broad weakness in the US Dollar (USD), driven by intervention from Japanese authorities to support the Yen.
Gold (XAU/USD) trims gains after opening the week with a bullish gap as buyers lack conviction amid conflicting US-Iran headlines and caution ahead of key US employment data. At the time of writing, XAU/USD trades around $4,036, easing from an intraday high of $4,084.
US President Donald Trump said over the weekend that he had called off a planned strike on Iran, with negotiations expected to begin on Monday. The announcement lifted hopes of a peace deal and sent Oil prices sharply lower, with West Texas Intermediate (WTI) down more than 8% at the time of writing.
The pullback in Oil prices eases immediate inflation concerns and pulls US Treasury yields lower, offering support to Gold. However, supply disruptions through the Strait of Hormuz keep Oil prices above pre-war levels.
Iranian Foreign Ministry spokesperson Esmaeil Baghaei also said Tehran is not currently holding talks with Washington, keeping traders sceptical about the chances of a deal and the full reopening of the Strait.
As a result, broader inflation concerns remain alive, and traders still see a high likelihood of the Fed raising interest rates this year. New York Fed President John Williams said on Monday that “rate policy is still well positioned to reach 2% inflation,” adding that “if inflation is not on track to 2%, the Fed will intervene to restore price stability.”
The CME FedWatch Tool shows that traders see a 65% chance of a rate hike in September. These hawkish bets continue to cap Gold’s upside despite broad weakness in the US Dollar (USD), driven by intervention from Japanese authorities to support the Yen.
On the US economic calendar, the ISM Manufacturing Purchasing Managers’ Index (PMI) is due later on Monday, followed by the JOLTS Job Openings report on Tuesday, ADP Employment Change on Wednesday and Nonfarm Payrolls (NFP) on Friday. The figures could offer fresh clues on the Fed's monetary policy outlook.
Technical analysis: Neutral RSI points to consolidation above $4,000
On the daily chart, XAU/USD maintains a capped tone as it trades below the 21-day Simple Moving Average (SMA) and well under the 50-day and 100-day SMAs.
This configuration suggests the broader trend is still under pressure, even as the Relative Strength Index (RSI) at 46 has recovered toward neutral and the Average Directional Index (ADX) at 27 hints at easing trend strength after the recent decline.
On the topside, immediate resistance is seen at the 21-day SMA near $4,065, followed by a more significant barrier at the 50-day SMA around $4,174, with the 100-day SMA at $4,416 reinforcing the broader bearish cap.
On the downside, initial support aligns with the horizontal level at $4,000, ahead of a deeper structural floor at $3,850, and a daily close below $4,000 would likely reopen the path toward the lower band of this support zone.
(The technical analysis of this story was written with the help of an AI tool. Know more.)
