Gold steadies around $5,350; bulls retain control amid rising tensions in Middle East
- Gold opens with a bullish gap as escalating Middle East conflict boosts safe-haven assets.
- The XAU/USD bulls now await more developments before positioning for any further gains.
- A modest USD pullback and Fed rate cut bets might continue to support the precious metal.
Gold (XAU/USD) stabilizes around the $5,350 area following some volatility during the Asian session and remains well within striking distance of the highest level since late January, touched earlier this Monday.
A dramatic escalation of geopolitical tensions in West Asia over the weekend unsettles global markets. In fact, the US and Israel launched a coordinated military strike on Iran, killing Supreme Leader Ayatollah Ali Khamenei. Adding to this, Iran’s Islamic Revolutionary Guard Corps (IRGC) Navy announced the closure of a critical maritime chokepoint – the Strait of Hormuz – and raised the risk of a protracted war in the Middle East. This, in turn, provides a strong boost to the traditional safe-haven Gold at the start of a new week.
As the opening volatility subsides, the XAU/USD bulls opt to take some profits off the table and await more developments before placing fresh bets. In the meantime, a modest US Dollar (USD) pullback from the highest level since January 23, along with bets for more interest rate cuts by the US Federal Reserve (Fed), might continue to act as a tailwind for the non-yielding Gold. This, in turn, warrants some caution before placing aggressive bearish bets around the precious metal and before positioning for any meaningful corrective decline.
Traders this week will confront important US macro releases, scheduled at the beginning of a new month, starting with the ISM Manufacturing PMI later today. This will be followed by the ADP report on private-sector employment and the ISM Services PMI on Wednesday, and the closely-watched Nonfarm Payrolls (NFP) report on Friday. The focus, however, will remain glued to geopolitical developments, which will have a significant impact on the global risk sentiment and play a key role in driving demand for the safe-haven Gold.
Gold needs to find acceptance above $5,400 to back the case for further gains
Against the backdrop of last week’s breakout above the $5,200 horizontal barrier, the strong move up on Monday favors the XAU/USD bulls. Moreover, the Moving Average Convergence Divergence (MACD) line stands above its signal in positive territory, with the histogram expanding, which supports building bullish momentum after the latest leg higher.
Meanwhile, the Relative Strength Index at 68.88 hovers just below overbought territory, showing firm but not extreme upside pressure. Initial support emerges near $5,260, where the latest consolidation area begins, followed by a deeper floor around $5,210, guarding the prior congestion band. A break below $5,210 would expose $5,180 as the next downside level.
On the topside, immediate resistance is located at the recent spike high around $5,390. A sustained push above $5,390 would open the way for an extension of the uptrend, while a failure to clear this barrier would keep XAU/USD vulnerable to a corrective pullback toward the cited supports.
(The technical analysis of this story was written with the help of an AI tool.)
XAU/USD 4-hour chart
