Gold remains firmly under bearish pressure for another week, kicking off Monday with the yellow metal once again eyeing a test of the $4,300 level. The decline is driven by ongoing Middle East tensions, higher US Treasury yields, and a stronger US dollar.
Fundamental Analysis
Gold has fallen around 3% in Monday’s Asian session, building on last week’s decline of over 10% as key support levels continue to give way.
Gold: Escalating Gulf conflict lifts USD
Selling pressure on Gold remains relentless, with the metal weighed down by renewed strength in the US dollar and rising US Treasury yields as tensions in the Middle East enter a more intense phase.
Gold is facing a dual headwind, losing its appeal as a safe-haven asset while the US dollar strengthens in its role as the world’s primary reserve currency, making dollar-denominated bullion less attractive for foreign investors.
At the same time, the latest escalation in the conflict has reignited fears of energy supply disruptions and rising inflation, increasing expectations of global interest rate hikes. This has pushed US Treasury yields higher, further pressuring non-yielding assets like Gold.
International Energy Agency (IEA) chief Fatih Birol warned that global oil supply losses could reach 11 million barrels per day—surpassing the shocks of 1973 and 1979 combined.
Markets were further unsettled as tensions between the United States and Iran intensified, with threats exchanged over the Strait of Hormuz and potential strikes on civilian and energy infrastructure, while Israel signaled plans for extended military operations.
Israel’s military confirmed it has launched a large-scale wave of strikes targeting infrastructure in Tehran. Meanwhile, reports suggest the US is considering a ground operation aimed at seizing Iran’s Kharg Island.
If the confrontation between the US and Iran escalates further, broader market sell-offs could accelerate, potentially forcing investors to liquidate Gold positions to cover losses in other assets.
That said, Gold may see a temporary bounce if a technical rebound emerges, as the daily Relative Strength Index (RSI) remains deeply oversold, below the 30 threshold.
Technical Analysis
The near-term outlook has shifted bearish as price breaks decisively below both the 21-day and 50-day Simple Moving Averages (SMAs), signaling a disruption of the prior uptrend structure. The 21-day SMA has turned lower and now acts as immediate resistance near $5,035, while the 50-day SMA, flattening around $4,970, further reinforces downside pressure.
Despite this pullback, the asset continues to trade well above the upward-sloping 100-day and 200-day SMAs, located near $4,610 and $4,095 respectively, suggesting the current move remains a sharp correction within a broader bullish trend. Meanwhile, the Relative Strength Index (RSI) has dropped to 26, entering oversold territory and indicating stretched bearish momentum.
In the short term, resistance is seen at the former breakdown zone around $4,650, followed by stronger resistance at the 21-day SMA near $5,035. A daily close above this level would be required to signal a potential stabilization and could open the door for a move toward the 50-day SMA near $4,970, helping to ease immediate downside risks.
On the downside, immediate support lies around $4,360. A break below this level would expose the psychological $4,300 area, where the rising 100-day SMA may attract dip-buying interest. Failure to hold this zone would shift focus toward the 200-day SMA near $4,095, which remains a critical support level for maintaining the longer-term bullish structure.
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