Gold has experienced a slight uptick on Monday, after experiencing nearly a 3% decline the previous week. The weak US Dollar has given some support to the precious metal, although resistance remains at $3,300 and within the $3,335-$3,350 range.
Recent geopolitical developments have affected gold’s status as a safe-haven asset, with a peace agreement between Israel and Iran lessening its demand. Meanwhile, ongoing trade talks between the US and major partners have slightly increased risk appetite this week.
Market Trends
The upward trend seen on Monday is considered a bullish correction, but the overall trend remains bearish. The Relative Strength Index (RSI) for the 4-hour charts stands below 50, showing continued bearish momentum.
Central banks are the largest holders of gold, with substantial purchases made in recent years, notably 1,136 tonnes in 2022. Gold’s price can be influenced by the US Dollar and geopolitical events, often showing an inverse relationship with the Dollar and interest rates.
The metal is viewed as a store of value and an investment during economic turbulence or inflationary periods. As a non-yielding asset, gold prices may rise with lower interest rates and fall when interest rates are higher.
Gold has made a modest recovery to start the week, bouncing slightly after last week’s steep three-percent retreat. Driving this rebound is noticeable softness in the US Dollar, which tends to work in favour of dollar-denominated commodities like gold. Still, resistance remains heavy, especially near the psychological $3,300 barrier, and more firmly in the $3,335 to $3,350 range, where sellers have continued to step in.
Recent international diplomacy has changed the tone in risk markets. With tensions between Israel and Iran easing, demand for defensive trades such as gold has quietly faded. Investors globally now appear just a touch more willing to take on risk, partly due to progress in commercial negotiations between Washington and its key trading partners. One could argue we are in a phase of reassessment, rather than directionless drift.
Technical Analysis
Monday’s move higher should be framed as a technical bounce. Though helpful for short timeframes, it does not alter the prevailing trend. Nature of the momentum currently remains to the downside. We see this confirmed by the RSI, which continues to linger beneath the neutral 50 level on the 4-hour timeframe. Price action has hinted at stabilisation, but not yet strength.
Central banks remain long-term participants in the metal’s market, having added considerably to their reserves, especially back in 2022. When official institutions act at scale, that level of demand is not speculative – it speaks to long-term allocation. For our purposes, it acts more as an anchor than a trigger.
Looking at broader forces, interest rates and the Dollar continue to operate as key drivers. The relationship between gold and yields has been well-established. When real rates climb, non-yielding metals like gold tend to sink as opportunity costs increase. Conversely, when rates turn lower – or are even seen to peak – the asset becomes more attractive again.
We are, therefore, watching upcoming rate policy signals closely. If US economic data surprises to the downside, it may renew expectations for a more dovish path, especially in the second half of the year. In that case, gold could find further support from both a softer Dollar and falling bond yields. But until such shifts appear at the policy level, rallies are likely to meet persistent selling near the mentioned resistance levels.
From our point of view, it’s less about timing a floor than understanding whether these corrections are providing relief within a downtrend, or early signals of base-building. This distinction matters greatly for any strategy involving options or leveraged positions – which rely not only on direction but also on volatility and timing. Volatility, notably, has been temperate, which may impact premium pricing across various maturities.
Expectations for inflation are also not giving metals the same tailwind we’ve seen in prior cycles. Consumer price pressures have shown signs of easing in recent prints. Until those readings shift materially, the case for inflation hedging through gold remains neutralised.
Risk management should reflect this background. While we may witness occasional spikes in price due to headline events, the trend remains under control of broader macro narratives, chiefly the US Dollar, yields, and positioning from large institutional players. Probability favours selling rallies rather than buying dips until a confirmed structure reversal presents itself, and it’s clearer when recalibrations in central bank policies are likely to emerge.
