Gold prices experienced buying interest on Monday, stabilizing after retracting from their all-time high of approximately $2,431-$2,432 last Friday. The recent escalation in the Middle East, particularly Iran’s attack on Israel, has heightened geopolitical risks, bolstering the appeal of gold as a traditional safe-haven asset.

Impact of US Dollar Dynamics on Gold

The subdued performance of the US Dollar (USD) also contributed to supporting gold prices. However, the downside for the USD remains limited due to ongoing expectations that the Federal Reserve (Fed) may postpone interest rate cuts, given persistent inflation concerns in the US.

Elevated US Treasury bond yields, driven by a hawkish Fed outlook, continue to support the USD, potentially limiting upward movement in gold prices.

Anticipated Economic Data and Fed Statements

Investors are now turning their attention to upcoming US economic data and comments from Federal Reserve officials, which could provide further direction.

The anticipation around the release of key indicators such as Retail Sales and the Empire State Manufacturing Index during the North American session is set to influence market sentiment.

Geopolitical Developments and Market Reactions

Despite the direct attack by Iran on Israeli territory sparking fears of a broader regional conflict, US assurances of non-engagement have somewhat contained market reactions, capping additional gains for XAU/USD.

Meanwhile, adjustments in market expectations for the Fed’s rate cuts—now seen as less likely in 2024 than previously forecast—have bolstered the USD near its highest levels since early November.

As traders await the US data, the hawkish stance of the Fed and a strong USD are expected to temper aggressive bullish bets on gold.

The interplay of these factors will be crucial in shaping the near-term trajectory of XAU/USD prices in a landscape marked by heightened geopolitical and economic uncertainties.

Gold Technical Outlook

Gold’s price edged up by 0.51%, closing at $2,358.35. Today’s trading situates it near a critical juncture with a pivot point at $2,366. If gold surpasses this level, it could encounter resistance at $2,395, followed by $2,414 and $2,435.

A move above these thresholds may signal continued bullish momentum. Conversely, if gold fails to maintain the pivot, immediate supports are positioned at $2,345, $2,325, and $2,304. Breaking below these could trigger a sharp downtrend.

The Relative Strength Index (RSI) stands at 53, suggesting a neutral to slightly bullish market sentiment. The 50-day Exponential Moving Average (EMA) at $2,326 supports the current price, underpinning a cautious yet positive outlook.

Overall, gold appears bullish above $2,366, but vulnerability increases beneath this pivotal price point.