Gold treads water below $3,400 on stronger USD

Gold treads water below $3,400 on stronger USD

Gold begins the week on a downward trend, trading below the key $3,400 mark per troy ounce. In the meantime, the precious metal has managed to limit its losses amid the stronger US Dollar (USD) and rising geopolitical tensions in the Middle East.

XAU/USD Technical Overview

From a technical perspective, the XAU/USD bears await some follow-through selling below the 100-period Simple Moving Average (SMA) and a convincing break below a short-term ascending channel before placing fresh bets. Given that oscillators on the daily chart have been losing positive traction and gaining negative momentum on hourly charts, the Gold price might then accelerate the fall towards the $3,323-3,322 intermediate support before eventually dropping to sub-$3,300 levels.

On the flip side, the $3,400 round figure now seems to have emerged as an immediate strong barrier for the commodity. A sustained move beyond could lift the Gold price to the $3,434-3,435 region en route to the $3,451-3,452 area, or a nearly two-month top touched last Monday. Some follow-through buying would then allow bulls to aim towards challenging the all-time peak, around the $3,500 psychological mark. The latter nears the ascending channel hurdle and could cap the precious metal.

Fundamental Overview

The Federal Reserve's (Fed) hawkish signal further underpins the Greenback and contributes to driving flows away from the non-yielding yellow metal. 

Meanwhile, the risk of a further escalation of geopolitical tensions in the Middle East keeps investors on edge amid persistent trade-related uncertainties. This, in turn, is seen lending some support to the safe-haven bullion and holding back traders from placing aggressive bearish bets around the Gold price. Hence, it will be prudent to wait for strong follow-through selling before positioning for an extension of the recent sharp retracement slide from a nearly two-month peak touched last Monday. 

Gold price struggles to lure buyers amid mixed fundamental cues

In a significant escalation in the ongoing war between Iran and Israel, the US launched airstrikes targeting three Iranian nuclear sites in Fordo, Natanz, and Isfahan early Sunday. Iran’s Foreign Minister Abbas Araghchi vowed that Iran would defend itself by all means necessary against not just US military aggression but also the reckless and unlawful actions of the Israeli regime.25-basis-point.

Araghchi called the event outrageous and added that it would have everlasting consequences. Meanwhile, US President Donald Trump warned that any retaliation would be met with greater force and added that there would either be peace or tragedy for Iran. This raises the risk of spillover and a broader conflict in the Middle East, which should underpin the safe-haven Gold price.

The Federal Reserve projected two rate cuts this year. However, Fed officials forecast only one 25-basis-point rate cut in each of 2026 and 2027 amid worries that the Trump administration's tariffs could push up consumer prices. This assists the US Dollar in holding steady near last week's swing high and keeps a lid on a further appreciating move for the non-yielding yellow metal.

Monday's release of flash PMIs could provide a fresh insight into the global economic health. This, along with geopolitical developments, will influence the risk sentiment and drive the safe-haven XAU/USD. Apart from this, the USD price dynamics should provide some meaningful impetus and help the commodity to break through a one-week-old trading range.