Gold Holds Modest Gains as Fed Hike Expectations and Iran Tensions Temper Bullish Momentum

• Gold rebounds from a more than one-week low, ending a three-session losing streak, though upside momentum remains limited.
• Softer inflation concerns and expectations for lower interest rates provide some support for the precious metal.
• However, uncertainty surrounding Iran and the Federal Reserve’s hawkish stance continue to strengthen the US Dollar and restrain gold’s gains.

Gold (XAU/USD) started the week on a firmer footing, recovering from a more than one-week low reached on Friday and ending a three-session losing streak. The rebound comes as crude oil prices retreat after opening with a modest bullish gap, following the announcement by Qatar and Pakistan of a formal 60-day framework designed to advance a final peace agreement between the United States and Iran. Lower oil prices have helped ease concerns about inflationary pressures and the prospect of higher interest rates, providing some support for the precious metal.

However, the upside for gold remains limited as markets continue to anticipate tighter monetary policy from the Federal Reserve. Traders currently see a strong likelihood that the Fed will raise interest rates before the end of the year, following last week’s hawkish guidance. Policymakers indicated that additional tightening may be necessary if inflation proves persistent. Fed Chair Kevin Warsh also emphasized the importance of maintaining price stability, suggesting that the central bank may be reluctant to cut rates quickly even if economic growth slows.

At the same time, geopolitical tensions continue to support the US Dollar. Over the weekend, Iran accused the United States and Israel of breaching the ceasefire agreement and announced the renewed closure of the Strait of Hormuz, citing ongoing Israeli military operations in Lebanon. Adding to market concerns, US President Donald Trump warned of further military action against Iran should Hezbollah continue its attacks on Israel. These developments highlight the fragile nature of the diplomatic process and keep geopolitical risk firmly in focus.

Further support for the safe-haven US Dollar comes from the escalating conflict in Eastern Europe, where Russia has intensified strikes on major Ukrainian cities. As a result, the Greenback has remained well supported after retreating from its highest level since May 2025, limiting the scope for a stronger gold recovery and encouraging caution among bullish traders.

Looking ahead, investors will closely monitor developments surrounding US-Iran relations, as any new headlines could generate significant volatility across global markets. In addition, remarks from key FOMC officials are likely to influence expectations for US monetary policy, shaping demand for the US Dollar and affecting gold prices. Given the current fundamental backdrop, any near-term rebound in gold may continue to attract sellers and struggle to gain sustained momentum.

XAU/USD Daily Chart Analysis

Gold may find it difficult to build on its intraday rebound as the broader technical outlook continues to favor the downside. Last week’s inability to break back above the 200-day Exponential Moving Average (EMA), which has now turned into a significant resistance level, followed by a renewed decline, reinforces the bearish bias surrounding XAU/USD.

Momentum indicators also suggest that buyers remain cautious. The Relative Strength Index (RSI) is holding in the upper-30s, reflecting weak bullish momentum and limited appetite for aggressive buying. Meanwhile, the Moving Average Convergence Divergence (MACD) remains below the zero line, with a slightly negative histogram indicating that bearish momentum is moderating but has yet to show signs of a meaningful reversal.

On the upside, the 200-day EMA around $4,334 represents the first major hurdle for gold bulls. A sustained daily close above this level would be required to ease the current bearish pressure and improve the near-term outlook. Until then, any recovery attempts are likely to be viewed as corrective moves within a broader consolidation phase, while prevailing momentum signals continue to leave the door open for additional downside tests in the sessions ahead.