Gold Slips Below $4,700 as Market Sentiment Weakens
Gold prices (XAU/USD) traded under pressure on Monday, fluctuating below the $4,700 level as the US Dollar regained strength. Persistent geopolitical uncertainty continued to reinforce the Greenback’s safe-haven appeal, while growing expectations of a more hawkish stance from the US Federal Reserve further weighed on the precious metal.
From a technical perspective, gold maintains a neutral tone after repeatedly failing last week to break above the 61.8% Fibonacci retracement level of the April-May decline. However, downside movement remained limited near the 200-period Simple Moving Average (SMA). In addition, the Relative Strength Index (RSI) stayed slightly above the 50 mark, signaling a modest bullish bias, while the Moving Average Convergence Divergence (MACD) remained below zero with negative readings, suggesting that bullish momentum is still not fully convincing.
Meanwhile, the 50.0% Fibonacci retracement around $4,696 is expected to act as immediate resistance, followed by stronger barriers near the 61.8% retracement at $4,743 and the 78.6% level around $4,810. A sustained breakout above these levels could pave the way toward the recent cycle high near $4,894. On the downside, the 200-period SMA at $4,675 provides initial support ahead of the 38.2% Fibonacci retracement near $4,650, while deeper support levels are seen around $4,592 and the structural low near $4,498.
Optimism surrounding a potential US-Iran peace agreement and conflict de-escalation faded rapidly amid renewed hostilities in the Strait of Hormuz. In addition, both US President Donald Trump and Iran rejected each other’s peace proposals aimed at ending the conflict and gradually reopening the strategic waterway, largely due to major disagreements over Iran’s nuclear program.
According to reports from the Wall Street Journal, Iran refused US demands to dismantle its nuclear facilities and halt uranium enrichment activities for the next 20 years. President Trump quickly criticized Iran’s response, calling it “completely unacceptable.” These developments kept geopolitical risks elevated, supporting the US Dollar and increasing downside pressure on gold prices.
At the same time, rising crude oil prices revived inflation concerns, while stronger-than-expected US employment data released on Friday strengthened the case for a more hawkish Federal Reserve policy outlook. The latest US Nonfarm Payrolls (NFP) report showed that the economy added 115,000 new jobs in April, surpassing market expectations, while the unemployment rate remained steady at 4.3%.
Furthermore, CME Group’s FedWatch Tool indicated that traders are currently pricing in more than a 20% probability that the Federal Reserve could implement at least one additional 25-basis-point interest rate hike before the end of the year. This outlook continued to support the US Dollar and reinforced bearish pressure on non-yielding assets such as gold.
However, traders remain cautious ahead of key US inflation data releases this week, including the Consumer Price Index (CPI) and Producer Price Index (PPI) reports scheduled for Tuesday and Wednesday. Investors will also closely monitor upcoming US Retail Sales data and speeches from influential Federal Open Market Committee (FOMC) members for further clues on monetary policy direction.
Despite the recent weakness, the absence of aggressive follow-through selling suggests caution before confirming that gold’s rebound from the psychological $4,500 level — its lowest point in more than a month reached last week — has completely lost momentum.