FX.co ★ XAU/USD, GOLD

Gold prices declined at the beginning of the new week, after failing to exceed the $4,400 barrier. A brief two-day rebound ended abruptly after recovering from a six-week low. The spot gold price is currently hovering around US$4,350, as market participants closely monitor the escalation of the geopolitical conflict in the Middle East, and assess its potential impact on global inflation indicators and subsequent monetary policy decisions of central banks. Over the weekend, Yemen's Houthis launched missile and drone attacks on sensitive facilities in Riyadh, leading to rapid developments and keeping regional volatility high. Meanwhile, the diplomatic stalemate continues, with Tehran strongly asserting that it will not reopen the strategically important Strait of Hormuz, nor resume dialogue with Washington, unless basic conditions are met, including a complete cessation of hostilities, the unfreezing of sovereign assets, and the lifting of the naval blockade. US President Trump's statements indicate a continued assertive stance on the conflict, which increases geopolitical risk premiums and increases demand for safe havens. Although the concurrent fluctuations in the energy market have moderated their impact on the overall market. Besides geopolitical news, macroeconomic factors and the strength of the dollar continue to dominate the recent trading dynamics of this non-income-generating precious metal. The Fed's latest monetary policy forecasts, particularly the hawkish chart, point to market expectations of another rate hike later this year, attracting investors to buy the dollar when it falls, pushing it toward multi-month highs. Nordea Bank analysts confirm that the continued flexibility of the US economy - which is evident in continuing inflationary pressures and a strong labor market - strengthens the justification for maintaining a tight monetary policy in the long term, with the main risk being further tightening intervention. However, due to the resumption of Saudi oil outflows, crude oil prices fell sharply, alleviating market concerns about runaway inflation and successfully stabilizing the benchmark 10-year US Treasury bond yield below the key 5% threshold. Lower sovereign bond yields played a crucial role in curbing aggressive dollar buying, mitigating the risks of an acceleration in gold price declines. Technically, the daily chart pattern for XAU/USD shows a slight defensive bias, as the spot price remains below the 100-day EMA and the key 38.2% Fibonacci retracement level, derived from the June-August overall volatility sequence. Momentum indicators reflect a balanced but cautious market environment, with the Relative Strength Index (RSI) hovering near the neutral threshold of 49, while the Moving Average Convergence/Divergence (MACD) remains in negative territory with a steady slope, indicating that any short-term upward momentum will likely face strong resistance. On the upside, initial technical resistance is located near the 100-day moving average at $4,367, followed by the 38.2% Fib retracement level at $4,406, while a stronger support level is located at the 23.6% Fib retracement level near $4,515. On the downside, immediate support is at the 50.0% Fibonacci retracement level around $4317, with deeper safety support levels at the 61.8% Fibonacci retracement level around $4229 and the 78.6% Fibonacci retracement level around $4103. The previous low around $3,942 marks the final overall bottom. Since important upcoming diplomatic events, such as the meeting of the leaders of China and the United States, as well as speeches by senior Federal Reserve officials, will ultimately influence the short-term trend of gold prices, taking a cautious stance in the market makes perfect sense.