Gold holds near $4,050 as selling pressure persists, even with Oil prices moving lower.

Gold trades under pressure near $4,050 during Monday’s Asian session, even as falling Oil prices and a weaker US Dollar—driven by the decline in USD/JPY—would typically provide support. Expectations of further Federal Reserve rate hikes, together with ongoing geopolitical tensions in the Middle East, continue to weigh on the precious metal ahead of this week’s closely watched Nonfarm Payrolls (NFP) report.

Technical Analysis

On the daily chart, XAU/USD is trading at $4,082.83 and maintains a bearish short-term outlook as the price remains below key simple moving averages. The 50-day SMA at $4,185.76, the 100-day SMA at $4,426.31, and the 200-day SMA at $4,490.85 are all positioned above the current price, indicating that any recovery attempts may face resistance during the broader corrective trend. Meanwhile, the 21-day SMA at $4,073.95 provides immediate dynamic support. The 14-period Relative Strength Index (RSI) is hovering around 48.3, slightly below the neutral 50 level, signaling weak momentum and suggesting that the market remains in a consolidation phase with a downside bias.

On the upside, the first key resistance level is located around the 50-day SMA at $4,185.76. A daily close above this level would help reduce near-term bearish pressure and potentially pave the way for further gains toward the 100-day SMA at $4,426.31, followed by the 200-day SMA at $4,490.85. On the downside, immediate support stands near the 21-day SMA at $4,073.95. A decisive break below this area could trigger additional declines and indicate that sellers are regaining control of the broader daily trend.

Fundamental Analysis

Gold is struggling to maintain gains above the $4,100 level after briefly closing above this threshold on Thursday, as the US Dollar (USD) rebounds strongly from six-week lows against its major currency counterparts.

Although Pakistan, acting as a mediator, stated that discussions between Tehran and Washington remain ongoing, renewed tensions in the Middle East have boosted demand for the Greenback as a safe-haven asset. The US carried out “heavy” strikes on Iran following new attacks against American forces in Jordan, increasing geopolitical uncertainty and supporting the USD.

In response, Iranian Parliament Speaker Mohammad Bagher Ghalibaf criticized the US actions, stating in a post on X that Washington would face consequences for its military response.

The Dollar is also benefiting from market expectations that the Federal Reserve may resume interest rate hikes later this year, despite Fed Chair Kevin Warsh maintaining a cautious stance on future monetary tightening during Wednesday’s post-meeting press conference.

HSBC analysts noted that the Federal Reserve kept interest rates unchanged for the fifth consecutive meeting, as expected, but highlighted that the close 9-3 vote reflected significant debate within the FOMC. The bank maintains a neutral view on bond duration while favoring high-quality investment-grade credit due to attractive yields. HSBC also remains constructive on the US Dollar, supported by resilient US economic conditions and favorable interest rate differentials.

Beyond the Dollar’s recovery, Gold is facing additional pressure from weaker-than-expected Chinese official manufacturing PMI data for July, while investors remain cautious ahead of the Bank of Japan’s (BoJ) monetary policy decision.

Markets saw sharp volatility during early US trading hours on Thursday after speculation of Japanese currency intervention sent the Yen (JPY) sharply higher, causing USD/JPY to plunge by around 600 pips within minutes. The sudden decline in USD/JPY weighed heavily on the Dollar, briefly allowing Gold to reclaim the $4,100 level.

Meanwhile, mixed US GDP figures and jobless claims data further pressured the USD and provided some support for the precious metal.

Looking ahead, Gold could receive a boost if the BoJ delivers a hawkish hold decision, potentially strengthening the Yen and putting additional pressure on the Dollar. However, a further escalation of Middle East tensions could have a mixed impact, as increased demand for the US Dollar as a safe-haven asset may limit Gold’s upside potential.