Gold Price Slips as Hawkish Central Banks Weigh on Market, Sellers Eye Break Below $4,600
Gold prices edged lower during Monday’s Asian session, attracting mild selling pressure while still showing resilience below the key $4,600 level. However, bearish momentum remains limited as traders await a confirmed breakdown. The cautious tone comes as major central banks, led by the US Federal Reserve (Fed), maintain a hawkish stance amid concerns that rising geopolitical tensions in the Middle East could reignite global inflation.
A brief move above $4,600 and the 100-hour Simple Moving Average (SMA) triggered short-covering in intraday trading. Still, the upside stalled near $4,650, close to the 38.2% Fibonacci retracement of the decline from April’s swing high. Technical indicators remain mixed— the Relative Strength Index (RSI) at 58.33 signals moderate bullish momentum without being overbought, while the Moving Average Convergence Divergence (MACD) remains slightly negative. This suggests that bullish attempts are tentative despite prices holding above short-term trend levels.
For a stronger bullish continuation, gold needs a sustained breakout above the 38.2% Fibonacci level at $4,651. A successful move could extend the rebound from the recent one-month low near $4,500. The next resistance is seen at the 50% retracement level around $4,696. On the downside, immediate support lies at the 100-hour SMA near $4,623. A break below this level could expose the 23.6% Fibonacci level at $4,595, with a deeper decline potentially targeting the broader swing low near $4,505.
Fundamental Overview
The Federal Reserve’s hawkish policy stance continues to support the US Dollar (USD), limiting upside potential for non-yielding assets like gold, which is now on track for a second consecutive weekly loss.
Geopolitical tensions also remain in focus. US President Donald Trump rejected Iran’s proposal to reopen the Strait of Hormuz and lift the blockade, instead maintaining naval restrictions until a nuclear agreement is reached. Reports suggesting potential new US military actions against Iran have heightened fears of further escalation, boosting demand for the USD as a safe-haven currency and pressuring gold prices.
Meanwhile, the Fed kept its benchmark interest rate unchanged at 3.50%–3.75% last week. Notably, the decision recorded the highest level of dissent since 1992, with three policymakers opposing the policy stance. Recent US macroeconomic data reinforces the Fed’s cautious outlook—March inflation data showed continued price pressures alongside strong economic resilience, increasing expectations that interest rates may remain elevated into next year.
According to the US Bureau of Economic Analysis, the Personal Consumption Expenditures (PCE) Price Index rose 0.7% month-over-month in March, with the annual rate climbing to 3.5% from 2.8% in February. Core PCE, which excludes food and energy, increased 3.2% year-over-year, up from 3.0% previously. Additionally, preliminary GDP data showed the US economy grew at an annualized rate of 2.0% in Q1 2026, a significant improvement from the revised 0.5% growth in Q4 2025.
Despite this, expectations for at least one 25 basis point rate cut by the Fed in 2026 have risen to over 15%, up sharply from just 1.3% previously. This shift is preventing aggressive USD buying and helping to limit further downside in gold prices.
Market attention now turns to upcoming US economic data releases, starting with the ISM Manufacturing PMI later this week. At the same time, developments in the Middle East will remain a key driver of USD strength and overall gold price direction.