Gold prices edged down by 0.19% on Monday, with XAU/USD trading at $4,011, as renewed hostilities between the US and Iran pressured the yellow metal. The recent escalation follows a broken ceasefire nine days ago, with the US conducting military strikes near the Strait of Hormuz for the ninth consecutive day and Iran retaliating against US military assets in Gulf states. Additionally, Ansar Allah, an Iran-linked group, announced a naval blockade on Saudi Arabia, further heightening geopolitical risks [1].
These developments have led to higher energy prices, with US benchmark West Texas Intermediate (WTI) crude oil rising 0.33% to $82.05 per barrel. The US 10-year Treasury yield increased by nearly five basis points to 4.598%, and the US Dollar Index (DXY) climbed 0.19% to 100.94, all of which are negative factors for gold prices [1].
On the monetary policy front, Federal Reserve Vice Chair Philip Jefferson indicated openness to raising rates if disinflation stalls, while Cleveland Fed President Beth Hammack highlighted persistent high inflation and a strong labor market. Money markets are currently pricing in an 82% probability of a rate hike by year-end, though there is a 79% chance rates will remain unchanged at the upcoming July meeting. The US economic calendar next week includes jobs data and S&P Global Flash PMIs, with Fed officials now in a blackout period ahead of the July 29 policy meeting [1].
Technically, gold remains in a bearish trend, with momentum indicators such as the Relative Strength Index (RSI) also signaling downward pressure. A drop below the July 17 low of $3,959 could expose the $3,900 psychological level, with further downside toward $3,886. For a reversal, gold would need to break above the descending trendline between $4,125 and $4,175, targeting the 50-day SMA at $4,291 and the 200-day SMA at $4,495, with $4,500 as a potential upside target [1].
CONCLUSION
Gold prices are under pressure due to escalating Middle East tensions, rising oil prices, higher US yields, and a stronger dollar. With the Federal Reserve signaling a cautious stance on inflation and markets expecting stable rates in the near term, gold's outlook remains bearish unless key technical levels are breached.