FX.co ★ XAU/USD, GOLD

After a slight recovery from its lows below $4,300, gold (XAU/USD) struggled to gain significant upward momentum, preferring to trade within a narrow range at the start of the week. This was due to heightened caution among market participants ahead of a series of key monetary policy announcements from central banks. The Federal Reserve, the Bank of England, and the Bank of Japan are all expected to announce their monetary policy decisions mid-week, contributing to the overall uncertainty in global financial markets. Meanwhile, the market consensus that major central banks will maintain their hawkish stance—due to inflationary risks stemming from rising energy costs—continues to exert considerable pressure on non-yielding precious metals. Adding to the woes, crude oil prices remain near their multi-month highs reached late last week, influenced by ongoing geopolitical tensions in the Middle East and local unrest near the Strait of Hormuz. Recent escalations in drone and missile clashes in the Arabian Peninsula, coupled with the stalled diplomatic negotiations between the Gulf states and Iran, have driven up geopolitical risk premiums, a trend clearly reflected in commodity markets. This energy supply shortage, along with last week's higher-than-expected domestic inflation, has reinforced market expectations that the Federal Reserve will adjust borrowing costs. Consequently, CME Group's FedWatch tool indicates that market participants widely anticipate a Fed rate hike at its upcoming two-day meeting. Against this macroeconomic backdrop, the dollar, as a safe haven, naturally rose to its highest level in nearly a week, creating a technical environment where spot gold prices are biased downward. However, given the political tensions, particularly the increasing pressure from the government to maintain monetary policy stability or implement easing measures, strong short positions remain relatively limited. Therefore, traders are generally advised to wait for clear sell signals and confirmation of a break below the psychological level of $4,300 before adopting a strong bearish strategy. At the same time, traders should be aware that any isolated bounce attempts are likely to encounter selling resistance near the upper resistance levels. Technically, the spot price's failure to hold above the 100-period simple moving average on the four-hour chart, coupled with last week's break below the 200-period simple moving average, has allowed sellers to regain control of the market in the medium term. Momentum indicators suggest a slight downward bias, with the Moving Average Convergence Divergence (MACD) showing a slight decline, while the Relative Strength Index (RSI) hovers around 41.30, not yet entering oversold territory. For sellers to confirm an accelerated decline towards deeper structural retracement levels (such as the 61.8% Fibonacci retracement near $4,241 or the 78.6% Fibonacci retracement near $4,118), the price must first decisively break below the nearby horizontal support level and the 50% Fibonacci retracement level near $4,327. Conversely, any short-term rally will face strong resistance, primarily around the 200-period simple moving average (SMA) near $4,383, followed by the 38.2% Fibonacci retracement level near $4,414. A sustained breakout with high trading volume above these resistance levels will only pave the way for a move towards the 100-period SMA near $4,472 and the 23.6% Fibonacci retracement level near $4,521. Ultimately, gold prices are expected to remain range-bound, defensive, and highly sensitive to upcoming geopolitical news until the central bank's monetary policy symposium concludes and provides a clearer picture of global interest rate trends.