Gold (XAU/USD) prices remained virtually unchanged on Monday, trading at $4,332 after reaching a daily low of $4,268, as market sentiment improved due to a halt in Iran-Israel attacks. Despite this, the anticipation of the upcoming US Consumer Price Index (CPI) release and lingering inflation concerns capped any significant gains for gold. The previous Friday's stronger-than-expected Nonfarm Payrolls report led to a near-5% weekly drop in gold prices, reinforcing the US labor market's strength and shifting the Federal Reserve's focus toward inflation management [1].
The US CPI is expected to rise by 4.2% year-over-year in May, following a high April print of 3.8%. This expectation, combined with the solid labor data, has led investors to price in 24 basis points of Federal Reserve tightening by the end of 2026, according to Prime Terminal data. The US Dollar Index (DXY) remained flat around 100.00, while the 10-year Treasury note yield increased by two basis points to 4.552%, further limiting gold's upside potential [1].
Oil prices, as reflected by the US crude oil benchmark West Texas Intermediate (WTI), gained over 1%. However, a swift resolution to the Middle East conflict could potentially lower energy prices, ease inflationary pressures, and open the door to lower interest rates. The New York Fed Survey of Consumer Expectations in May indicated that one-year inflation expectations dipped from 3.6% to 3.5%, while three- and five-year expectations remained steady at 3.1% and 3%, respectively [1].
From a technical perspective, gold is consolidating but remains mildly bearish after falling below the 200-day Simple Moving Average (SMA) at $4,436. The Relative Strength Index (RSI) is flatlining around 34.05, suggesting sellers are in control and the path of least resistance is for gold to drift lower. Key support levels are identified at $4,268, $4,200, and the March 23 cycle low of $4,098, with $4,000 as the next significant area of interest if declines continue [1].
CONCLUSION
Gold prices are currently steady but face downward pressure due to strong US economic data and expectations of higher inflation. Market participants are closely watching the upcoming US CPI release and developments in the Middle East for further direction. Technical indicators suggest a mildly bearish outlook for gold in the near term.