Gold Pulls Back From Three-Month High as Markets Await Details of Iran Sanctions
Gold prices (XAU/USD) eased slightly from their highest level since mid-May on Monday but maintained a bullish tone, trading near $4,630 during the European session. A weaker U.S. dollar, driven by fading expectations of an imminent Federal Reserve rate hike and lower U.S. Treasury yields, continued to support the precious metal and reinforced the broader uptrend.
The U.S. dollar remained close to a three-month low, making non-yielding assets such as gold more attractive to investors. This environment has helped bullion extend last week’s breakout above the technically significant 200-day Simple Moving Average (SMA), strengthening the case for further gains.
Gold Technical Outlook Remains Bullish
Friday’s close above the key $4,615–$4,620 confluence zone—formed by the 200-day SMA and the 61.8% Fibonacci retracement of the April-to-June decline—has been viewed as a fresh bullish signal for XAU/USD traders.
Technical indicators continue to favor the upside. The Moving Average Convergence Divergence (MACD) remains in positive territory and continues to trend higher, suggesting sustained bullish momentum. However, the Relative Strength Index (RSI) at 71.77 signals overbought conditions, which could limit immediate gains and trigger short-term profit-taking.
On the upside, gold faces initial resistance near the 78.6% Fibonacci retracement level at $4,684.43. A decisive break above this area could pave the way for a move toward the cycle high around $4,891.38.
On the downside, the first major support level is located near the 61.8% Fibonacci retracement at $4,521.97, reinforced by the 200-day SMA at $4,516.88. Additional support is seen at the 50% retracement level of $4,407.86 and the 38.2% retracement at $4,293.75.
Fed Policy Expectations and Treasury Actions Influence Gold Prices
Softer-than-expected U.S. inflation data for July has reduced expectations of near-term Federal Reserve tightening. As a result, market participants increasingly expect policymakers to keep interest rates unchanged at the upcoming September 15–16 Federal Open Market Committee (FOMC) meeting.
Adding to the market impact, U.S. Treasury Secretary Scott Bessent signaled a willingness to intervene more aggressively if bond yields rise above levels seen before the Treasury’s recent buyback announcement. Last week, the U.S. Treasury revealed plans to at least double long-term debt buyback operations beginning in September.
Bessent also indicated that individual buyback operations could exceed $4 billion, helping keep Treasury yields below multi-year highs and preventing the U.S. dollar from staging a meaningful recovery.
Despite this, markets still price in a more than 70% probability that the Federal Reserve could raise borrowing costs at least once before the end of the year, largely due to inflation risks linked to volatile oil prices.
Investors are now focusing on the upcoming U.S. Personal Consumption Expenditures (PCE) Price Index data, the Fed’s preferred inflation gauge, due later this week. Market participants will also closely monitor remarks from Federal Reserve Chair Kevin Warsh at the Jackson Hole Symposium for clues about the future path of monetary policy.
Iran Sanctions and Geopolitical Risks Keep Safe-Haven Demand Alive
Geopolitical tensions remain another key factor influencing gold prices. U.S. Treasury Secretary Scott Bessent is expected to unveil what he described as the toughest sanctions package in history against Iran during a press conference on Monday.
In response, Iran’s Supreme National Security Council Secretary Mohsen Rezaei warned that Tehran could halt all oil exports through the Strait of Hormuz and other routes in the Persian Gulf if economic pressure continues to intensify. He further stated that any country participating in U.S. sanctions would be viewed as engaging in hostile action against Iran.
These developments have maintained a significant geopolitical risk premium in global markets. While heightened uncertainty typically supports safe-haven assets such as gold, it can also boost demand for the U.S. dollar during periods of market stress.
As traders await further details on the proposed sanctions and upcoming U.S. economic data, gold remains supported by a combination of weaker Treasury yields, a softer dollar, and persistent geopolitical uncertainty, although overbought technical conditions could limit near-term upside momentum.