Gold (XAU/USD) traded around $4,038 after rebounding from near $4,000, following a pullback from Monday’s $4,116 high and a peak around $4,116 after the week opened with a bullish gap and an intraday run to $4,116. Moves in Oil prices and the US Dollar (USD) were shaped by a pause in US-Iran hostilities, while the market awaited Wednesday’s Federal Reserve (Fed) decision, with expectations for rates to remain at 3.50% – 3.75%. June US inflation rose by less than expected but stayed above the Fed’s 2% target, a dynamic linked to the reopening of the Strait of Hormuz and the subsequent fall in Oil prices; later, renewed mid-July attacks coincided with the dropping of the Memorandum of Understanding (MoU).
The USD weakened later after softer data: the NER Pulse report showed companies added an average of 15K jobs per week in the four weeks to 11 July, while CB Consumer Confidence fell to 90.8 in July from 92.2 in June. Technically, XAU/USD remains below key SMAs on the four-hour chart—20-period at $4,061.52 and 100-period at $4,066.90—and also under the 200-period at $4,106.37, with RSI near 43. On the daily chart it sits below the 20-day SMA at $4,073.07, while the 100-day and 200-day SMAs stand at $4,458.32 and $4,492.52, with RSI near 44; resistance levels include $4,061.52, $4,066.90, $4,106.37, and $4,116, while support is at $4,000 and then $3,941.
Federal Reserve Policy Outlook And Gold’s Sensitivity
As we watch the Federal Reserve’s rate decision today, we expect gold to see sharp price swings around the current $4,038 level. Policymakers will likely hold interest rates at 3.50% to 3.75%, but a hawkish tone from the Fed could temporarily push prices down toward the key $4,000 support. Historically, gold has shown intense sensitivity to Fed policy shifts, often dropping temporarily during rate-pause announcements before resuming its upward path.
Geopolitical Risks, Resistance Levels, And Trading Strategies
We must also closely monitor the fragile situation in the Middle East, as the current pause in hostilities has temporarily dragged down oil prices and gold demand. History shows us that geopolitical tensions are a primary driver for precious metals, much like in 2024 when safe-haven buying pushed gold up by more than 15% in a matter of weeks. Because the underlying conflict is unresolved and negotiations remain fragile, we believe any sudden escalation could trigger a rapid rally back toward the $4,116 level.
For derivative traders in the coming weeks, we recommend watching the immediate resistance levels between $4,061 and $4,073. Since technical indicators like the Relative Strength Index are hovering near 44, the short-term momentum still slightly favors sellers. We suggest utilizing call options near the major $4,000 psychological floor to capture potential safe-haven spikes while limiting our downside risk.
If gold breaks below the critical $3,941 monthly low, we should prepare for a deeper corrective phase. During the late-2024 market correction, gold fell roughly 6% from its peak before strong buying interest returned to lift the market. Therefore, we advise keeping stop-losses tight on any bullish bets to protect trading capital against a deeper drop toward longer-term moving averages.
