Gold falls more than 1% toward $4,050 as expectations of Fed rate hikes and a stronger US Dollar weigh on prices.

Gold extends its losses, falling more than 1% toward the $4,050 level during Monday’s Asian session as escalating tensions between the United States and Iran boost demand for the safe-haven US Dollar. At the same time, concerns that higher Crude Oil prices could fuel inflation are reinforcing expectations of a Federal Reserve rate hike in 2026, strengthening the Greenback further and adding pressure on the non-yielding precious metal.

Fundamental Analysis

Gold remains under heavy selling pressure at the beginning of the week as the US Dollar strengthens, supported by a sharp rebound in Oil prices and renewed inflation concerns that reinforce expectations of a hawkish stance from the Federal Reserve.

The move follows a fresh escalation of tensions in the Middle East after the United States launched additional strikes against Iran on Sunday. In response, Iran reportedly targeted US facilities across Gulf states and reiterated the closure of the strategically important Strait of Hormuz.

Rising inflation worries have also contributed to Gold’s weakness after the Fed highlighted increasing price pressures in its semi-annual Monetary Policy Report released on Friday. The central bank noted that inflation accelerated further this spring, driven by the combined effects of tariffs, higher energy costs linked to the conflict, and continued investment in artificial intelligence infrastructure.

Market participants remain cautious ahead of Tuesday’s release of the US Consumer Price Index (CPI) report and Federal Reserve Chair Kevin Warsh’s first semi-annual testimony before Congress.

For now, traders are expected to keep a close eye on developments surrounding the US-Iran conflict and fluctuations in Oil prices for fresh market direction. From a technical perspective, the bearish outlook for Gold remains intact, with downside risks continuing to dominate the near-term picture.

Technical Analysis

On the daily timeframe, Gold (XAU/USD) is trading near $4,069, maintaining a bearish short-term bias as it remains below both the 21-day SMA at $4,128 and the 50-day SMA at $4,344. The longer-term technical outlook also continues to favor sellers, with the 200-day SMA at $4,495 and the 100-day SMA at $4,583 positioned well above current market levels. Meanwhile, the RSI near 41 suggests bearish momentum is still present, although selling pressure appears to be moderating rather than reaching oversold territory.

On the upside, the first resistance zone is located around the 21-day SMA at $4,128. A sustained move higher could then target the 50-day SMA near $4,344, followed by the 200-day SMA around $4,495 and the 100-day SMA near $4,583. With no significant moving-average support levels immediately beneath the current price, any rebound attempt remains fragile while Gold continues to trade below this cluster of resistance levels. Unless buyers can regain control above the 21-day SMA, the broader risk profile remains tilted toward further downside pressure.