Gold futures started the week off opening at $4,163.90 which is a full $64 below the close on Friday at $4,227.90. Gold futures on Monday did manage to gain $18.20 but still closed beneath the closing price on Friday.
Although oil prices have come down substantially since the announcement of a MOU being signed by Iran and the US, we haven’t seen gold trade anywhere close to where it had been prior to the conflict that took oil higher and had been the primary driver of higher interest rate fears which were reported to be the leading headwinds for gold. Now that oil prices have come down that narrative no longer makes sense as the price of gold has yet to rebalance along with them.
The disconnect between gold and oil points to something deeper at work in the precious metals market. With geopolitical risk premiums fading from both energy markets and broader safe-haven assets, the spotlight has shifted squarely toward central bank policy and the trajectory of the U.S. dollar. Gold’s failure to recover in lockstep with the easing in oil-driven inflation fears suggests that the market may be grappling with a recalibration of the rate-cut outlook rather than simply tracking the familiar risk-off/risk-on pendulum. In this environment, gold is searching for a new fundamental anchor.
Adding to the pressure on gold, dollar strength continues to weigh on the metal. The greenback has benefited from a relative flight-to-quality bid that competes directly with gold for capital. When uncertainty steers investors toward yield-bearing dollar assets, gold’s appeal as a non-yielding store of value tends to diminish at the margin. Federal Reserve Chairman Kevin Warsh’s tone coming out of the most recent FOMC press conference did little to encourage gold bulls, as markets interpreted his remarks as signaling a measured and data-dependent approach rather than any imminent pivot toward easing. Until there is meaningful clarity on the path of rate cuts, or a reversal in dollar momentum, gold may find it difficult to sustain any recovery attempt.
From a technical standpoint, Monday’s gap lower leaves gold in an uncomfortable position heading into the balance of the week. The $4,163 to $4,166 range now marks the initial support zone established by the week’s opening print, while a return to Friday’s close near $4,228 would represent the first meaningful recovery target for bulls. A sustained break below $4,140 on a closing basis could invite further selling pressure, potentially opening the door toward the $4,080 to $4,100 area where gold found its footing during last month’s consolidation. On the upside, reclaiming and holding above $4,200 on a closing basis would be the minimum requirement to suggest that the near-term downside pressure is beginning to abate.
Going forward, traders will be watching closely for any shifts in the prevailing narrative. Should inflation readings remain sticky or Fed commentary continue to push back against near-term rate cuts, gold could face additional headwinds as expectations for monetary easing get pared back further. Conversely, any signs of unexpected economic softening in upcoming data releases, or a renewed escalation of geopolitical tension, could quickly reinvigorate safe-haven demand for the metal. For now, the path of least resistance appears to lean lower, and the burden of proof rests with the bulls to defend current levels and demonstrate that last week’s highs are not simply being left behind.
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