Gold (XAU/USD) traded flat above $4,500 on Monday, after a four-day fall from $4,770. The price steadied as markets watched the Middle East conflict and followed updates on US-Iran talks.
Iran’s Foreign Ministry said the talks with the US are ongoing. Iranian and Omani technical teams also discussed ways to restore safe transit through the Strait of Hormuz, while Washington and Tehran reviewed a peace proposal.
Market Drivers And Near Term Bias
Gold prices stayed pressured by a global bond sell-off and high Oil prices. US 10-year yields traded at 4.60%, a one-year high, as fast-rising inflation and solid economic data raised expectations of Fed rate hikes in late 2026 or early 2027.
Technically, XAU/USD kept a bearish near-term bias after nearly a 4% drop last week. The 4-hour RSI stayed oversold, while MACD remained negative with contracting red bars.
Support was near $4,500, with the next level around $4,350 (March 26 low). Resistance sat near $4,560, then around $4,640, ahead of highs at $4,770.
Central banks added 1,136 tonnes of gold worth about $70 billion in 2022, the highest yearly purchase on record. Gold often moves inversely to the US Dollar and US Treasuries.
Positioning And Key Levels To Watch
Gold is currently holding above the $4,500 level, but we see significant pressure building from multiple fronts. The potential for de-escalation in the Middle East is reducing gold’s appeal as a safe haven. This leaves the metal exposed to the primary headwind, which is the high interest rate environment.
The rise in US 10-year bond yields to a one-year high of 4.60% is a major drag, as gold offers no yield. With recent inflation data, like last month’s Consumer Price Index (CPI) coming in at 3.9%, the market now prices in over a 60% chance of a Federal Reserve rate hike by early 2027. This is a significant reversal from late 2025 when rate cuts were still being discussed.
We are seeing the geopolitical risk premium fade as talks between the US and Iran progress. Any confirmed agreement to secure safe transit through the Strait of Hormuz would likely trigger a move below current support levels. This follows a classic pattern where diplomatic breakthroughs reduce the immediate demand for gold.
While the short-term outlook is weak, we must remember that central bank buying provides a floor under the price. According to recent World Gold Council data, central banks added another 290 tonnes in the first quarter of 2026, continuing a trend of record purchases seen since 2022. This persistent demand could slow the decline and create strong support near the $4,350 area.
Given the bearish technical signals and macro headwinds, traders should consider strategies that benefit from a price decline. Buying put options with a strike price below $4,500 could be effective if that support level breaks in the coming weeks. For those anticipating a slower grind lower, a bear call spread with a ceiling around the $4,640 resistance may offer a more favorable risk-reward profile.
We are watching the oversold Relative Strength Index (RSI) for any short-term bounce, which could offer a better entry point for new bearish positions. A failure to reclaim the $4,560 resistance area would confirm that the downward trend remains firmly intact. Any renewed strength in the US Dollar would also serve as a catalyst for further downside.
