International gold prices retreated during Asian trading hours on Monday, with spot gold (XAU/USD) falling near the $4,530 level, ending a two-day consecutive gain. Despite ongoing geopolitical risks in the Middle East, growing expectations that U.S. interest rates will remain elevated for an extended period are prompting some profit-taking among gold bulls.
Over the weekend, Iranian officials stated that diplomatic talks with the United States are continuing but have yet to yield any substantive commitments on nuclear issues. Meanwhile, Iran’s Parliament Speaker and chief negotiator Ghalibaf emphasized that Tehran would not accept any agreement with Washington unless it ensures the legitimate rights of the Iranian people. The lack of a breakthrough in negotiations has somewhat dampened market expectations for a de-escalation in regional tensions.
At the same time, Israel has expanded ground military operations in Lebanon, posing new challenges to an already fragile ceasefire. Markets are concerned that a further escalation could potentially impact regional stability and global energy supply chains. Although gold, as a traditional safe-haven asset, has attracted some buying support, shifts in risk sentiment have not fully translated into upward momentum for prices.
The gold market is currently being influenced by two opposing forces: safe-haven demand and interest rate expectations. Typically, escalating geopolitical risks drive capital toward assets like gold. However, in the current environment, expectations regarding Federal Reserve monetary policy are also exerting a significant impact. Since gold does not generate interest income, a high-rate environment increases the opportunity cost of holding the precious metal, thereby reducing its appeal.
Last Friday, several Fed officials noted that if the Middle East situation leads to sustained increases in energy prices and further inflationary pressures, the central bank may need to adopt a more cautious policy stance. Markets believe that rising crude oil prices could transmit to broader price levels through transportation, manufacturing, and consumption channels, raising the risk of renewed inflation in the United States.
Currently, markets widely expect the Fed to maintain a restrictive monetary policy in the near term, keeping U.S. Treasury yields elevated. The U.S. dollar index has remained resilient, supported by strong interest rate expectations, further capping gold's upside potential. For international investors, higher-yielding dollar-denominated assets continue to hold strong appeal.
Globally, gold has experienced notably increased volatility recently. Some funds continue to view gold as an important hedge against geopolitical risks, while others are more focused on U.S. economic performance and the future interest rate path. Market sentiment continues to oscillate between safe-haven demand and policy expectations, resulting in gold maintaining a broad range-bound pattern at elevated levels.
One institutional analyst noted, "The gold market has entered a phase where safe-haven sentiment and interest rate expectations are competing. Future price movements will seek a new equilibrium between geopolitical risks, U.S. economic data, and shifts in Fed policy."
From a daily chart perspective, gold remains in a long-term uptrend overall. Prices are trading above the main moving average system, indicating that the broader bullish structure remains intact. The $4,500 area currently serves as a key support level, while the $4,580 to $4,600 zone forms a critical resistance band. A sustained break above $4,600 could pave the way for a challenge of historical highs, while a drop below $4,500 may trigger a deeper technical correction. Although the RSI indicator has retreated from overbought levels, it remains in bullish territory, suggesting underlying buying interest persists. The MACD indicator continues to trade above the zero line, though the histogram has narrowed, indicating some moderation in upward momentum.
On the 4-hour chart, gold's short-term trend appears to be in a consolidation phase. Prices have pulled back after repeatedly failing to break above the $4,560 area, with short-term moving averages gradually flattening. The MACD indicator has formed a bearish crossover, signaling weakening short-term momentum, while the RSI has retreated toward neutral territory. If prices can reclaim and hold above $4,550, a retest of the $4,580 resistance zone is likely. A break below $4,520, however, could lead to further declines toward support at $4,500 or even $4,480. Overall, the market is awaiting a new fundamental catalyst.
This week, market focus will center on the U.S. May non-farm payrolls report. Employment data not only reflects the state of the U.S. economy but will also directly influence market expectations for future monetary policy. If job growth remains robust and wage growth stays elevated, markets may further delay expectations for future policy easing, which would weigh on gold. Conversely, signs of a cooling labor market could bolster expectations for a future policy pivot, providing fresh upward momentum for gold.
Comments