Gold rose 0.50% on Monday, with XAU/USD trading near $4,179 after rebounding from $4,136, as early US-Iran talks were described by US Vice President JD Vance as creating a “good foundation” for a deal. Iran had threatened to close the Strait of Hormuz but did not act after President Donald Trump warned the war would resume if the route were shut. US equities were choppy while oil extended declines, easing inflation expectations and supporting the non-yielding metal. West Texas Intermediate fell 2.40% to $73.67, pointing to softer petrol prices.
With little on the US data calendar, markets stayed focused on the Federal Reserve’s hawkish stance: money markets had priced a nearly 90% chance of a rate hike in December, after nearly half of FOMC members backed an increase in 2026. Bank of America forecasts three 25-basis-point hikes in 2026—September, October and December—while Deutsche Bank expects two 25-basis-point moves in September and December; pricing also implies a 45% chance of a hike at the 29 July meeting. Technically, resistance is seen around $4,335–$4,350, then $4,300 and the 200-day SMA at $4,469, while a close below $4,213 risks $4,000 and $3,605. Central banks bought 1,136 tonnes of gold worth about $70bn in 2022.
—
Gold Strengthens on Oil Weakness and Geopolitical Developments
We are seeing a slight relief rally in gold today, with prices around $4,179, thanks to falling oil prices. The positive news from US-Iran talks has pushed WTI crude oil down over 2% to near $73 a barrel. This eases immediate inflation fears, which is temporarily helping the non-yielding metal.
Despite this small gain, the bigger picture for us is the Federal Reserve’s hawkish stance. With money markets pricing in a 90% chance of a December rate hike, the path of least resistance for gold seems lower. Recent inflation figures, like the May Core PCE which came in at a stubborn 2.8%, only reinforce the case for higher rates for longer.
—
Rate Policy Outlook, Technical Levels, and Trading Strategy
This week is critical, as we are watching for Thursday’s Core PCE and GDP data for further direction. Any signs of persistent economic strength or sticky inflation will likely cement expectations for a rate hike as soon as September. This sets us up for significant volatility, making options strategies like straddles potentially attractive around these data releases.
From a technical standpoint, the trend is bearish, and we are looking at key levels to structure our trades. The psychological $4,000 mark is a major target for put options if the price breaks down below current support. On the other hand, we see significant resistance near the $4,335 trendline, which could be a good level to sell call credit spreads against.
This environment reminds us of the 2022-2023 period when a hawkish Fed consistently overpowered geopolitical risks, capping gold’s upside. The labor market also remains unexpectedly strong, with the latest report showing over 250,000 jobs added, giving the central bank plenty of room to tighten policy. Therefore, we believe that rallies based on temporary geopolitical relief are likely to be sold into.
