Gold Price Hangs Near Daily Low Amid Modest USD Strength; Downside Seems Cushioned
Gold price (XAU/USD) retains its negative bias through the first half of the European session on Monday and currently trades near the lower end of its daily range. The US attack on Iran’s nuclear facilities on Sunday raises the risk of a broader conflict in the Middle East and benefits the US Dollar's (USD) status as the global reserve currency. Moreover, the Federal Reserve's (Fed) hawkish signal further underpins the Greenback and contributes to driving flows away from the non-yielding yellow metal.
Meanwhile, the risk of a further escalation of geopolitical tensions in the Middle East keeps investors on edge amid persistent trade-related uncertainties. This, in turn, is seen lending some support to the safe-haven bullion and holding back traders from placing aggressive bearish bets around the Gold price. Hence, it will be prudent to wait for strong follow-through selling before positioning for an extension of the recent sharp retracement slide from a nearly two-month peak touched last Monday.
In a significant escalation in the ongoing war between Iran and Israel, the US launched airstrikes targeting three Iranian nuclear sites in Fordo, Natanz, and Isfahan early Sunday. Iran’s Foreign Minister Abbas Araghchi vowed that Iran would defend itself by all means necessary against not just US military aggression but also the reckless and unlawful actions of the Israeli regime.25-basis-point
Araghchi called the event outrageous and added that it would have everlasting consequences. Meanwhile, US President Donald Trump warned that any retaliation would be met with greater force and added that there would either be peace or tragedy for Iran. This raises the risk of spillover and a broader conflict in the Middle East, which should underpin the safe-haven Gold price.
The Federal Reserve projected two rate cuts this year. However, Fed officials forecast only one 25-basis-point rate cut in each of 2026 and 2027 amid worries that the Trump administration's tariffs could push up consumer prices. This assists the US Dollar in holding steady near last week's swing high and keeps a lid on a further appreciating move for the non-yielding yellow metal.
Source : FXStreet
