Gold fell in the North American session on Monday as the US Dollar pared earlier losses and risk appetite weakened amid limited progress in US-Iran talks. XAU/USD traded at $4,673, down 0.75%.
Geopolitical developments kept pressure on bullion, with Iran linked to a plan to reopen the Strait of Hormuz if US restrictions on Iranian ports are lifted. Axios reported Tehran proposed a three-stage process covering the war, the Strait of Hormuz, and nuclear discussions.
Rates And Geopolitics Drive Gold
US President Donald Trump cancelled his envoy’s trip to Pakistan and said Iran had sent a “much better” deal, but it was still not enough. Markets also focused on expectations for higher-for-longer US rates, which weighed on the non-yielding metal.
The US 10-year Treasury yield rose 3.5 basis points to 4.342%. Prime Terminal data showed swaps pricing for the Federal Reserve to keep rates steady in 2026.
The Fed meeting runs from Tuesday to Wednesday, with a policy statement and a press conference by Chair Jerome Powell. Powell’s chair term ends on May 15, while his Fed term runs to January 31, 2028.
A Reuters poll put the median end-2026 gold forecast at $4,916, up from $4,746.50 three weeks earlier. Tuesday’s calendar includes ADP Employment Change 4-week average, housing data, and the Conference Board Consumer Confidence survey for April.
Technical Levels And Market Positioning
Technically, gold held below $4,700, with resistance at the 20- and 100-day SMAs above $4,729 and $4,733. Support levels were cited at $4,650, $4,600, and the April 2 low of $4,554, while upside levels included $4,750 and $4,800.
Central banks added 1,136 tonnes of gold worth around $70 billion in 2022, according to the World Gold Council. Gold is described as inversely related to the US Dollar and US Treasuries, and often moves with rate expectations.
We are seeing gold prices weaken as the market prioritizes the strong US Dollar and rising Treasury yields over gold’s safe-haven appeal. With the US 10-year yield at 4.342%, holding a non-yielding asset like gold becomes more expensive. This pressure is likely to continue heading into the Federal Reserve meeting this week.
The upcoming Fed meeting is the most critical event, especially since it marks Jerome Powell’s last press conference as Chair. Uncertainty around his successor creates potential for significant volatility, as any hint of a more hawkish or dovish stance from the next Fed leadership will move markets. This is a continuation of the “higher-for-longer” rate environment that we first saw take hold back in 2024.
For the next few days, derivative strategies that favor downside or range-bound price action could be considered. Buying put options with strike prices near the $4,650 and $4,600 support levels offers a defined-risk way to trade a potential drop following the Fed meeting. The technical momentum currently supports this cautious, bearish stance.
However, we must watch the Middle East headlines closely, as the geopolitical situation remains a wildcard. Just as we witnessed during the conflicts that unfolded in 2022 and 2024, any sudden escalation could trigger a flight to safety and send gold sharply higher, overriding the interest rate concerns. A de-escalation, on the other hand, would likely add to the current downward pressure.
Despite the short-term headwinds, the underlying support for gold remains strong due to persistent central bank buying. Following the record-breaking purchases we saw in recent years, where central banks added over 1,000 tonnes to reserves annually in 2023 and 2024, this demand creates a solid floor under the market. Therefore, significant dips below $4,600 might be viewed by many as long-term buying opportunities.
In the coming weeks, nimble traders should be prepared to pivot quickly based on the Fed’s new direction and geopolitical news. While puts are attractive now, a surprisingly dovish signal from the Fed or an escalation in Iran could make call options targeting the $4,750 and $4,800 levels very appealing. Watching the $4,733 resistance level is key, as a break above it would signal that the bears are losing control.
