Gold Price Holds Near $3,375 as U.S. Strikes, Fed Policy, and PMI Data Drive Market Uncertainty

Gold (XAU/USD) Holds Above $3,375 as War Tensions, Fed Policy, and PMI Data Shape Market Direction

XAU/USD Pushes Higher Amid U.S.–Iran Escalation and Safe-Haven Demand

The gold market opened the week with renewed bullish momentum, as XAU/USD climbed to approximately $3,375 per ounce during early Asian trading hours Monday. This gain followed U.S. President Donald Trump’s authorization of airstrikes on Iran’s nuclear facilities—Fordow, Natanz, and Isfahan—marking a significant escalation in Middle East conflict dynamics. The strikes pulled the United States directly into Israel’s war with Iran, prompting widespread investor concern and a rush into haven assets.

Gold’s opening price of $3,400.70 on Monday reflected a 1% gain from Friday’s close of $3,368.10, but the momentum remains fragile as traders assess whether geopolitical instability will accelerate further or stabilize with potential diplomacy. Gold’s current price action shows a recovery from its weekly low of $3,322, with bulls attempting to reclaim control of the trend. However, selling pressure remains just below the $3,400 psychological barrier, capping the upside.

Fed's Mixed Signals and PMI Anticipation Add Crosswinds to XAU/USD

Overlaying geopolitical risk is the shifting narrative from the U.S. Federal Reserve. Governor Christopher Waller noted last Friday that the Fed may be ready to begin cutting interest rates as early as July, reinforcing dovish expectations. At the same time, the Fed’s updated dot plot only projects one 25bps cut in 2026 and another in 2027, citing concern that Trump-era tariffs may reaccelerate consumer price inflation.

This policy uncertainty has directly influenced the U.S. Dollar, which remains firm near last week’s highs. A strong dollar generally weighs on gold prices, as the commodity becomes more expensive for holders of other currencies. Nevertheless, gold has found buyers thanks to inflation concerns and broad economic fragility—especially as traders await fresh macro signals from Monday’s S&P Global Flash PMIs, a key measure of U.S. economic health.

A PMI print above 50.0 typically indicates expansion in private business activity and supports the dollar. A weaker-than-expected number could revive recession fears and provide further upside for gold, particularly as traders search for safe-haven hedges in an environment shaped by rate volatility and fiscal risks.

Geopolitical Risk Premium Fuels Price Support but Faces Diplomatic Risk

Tensions between Iran and Israel have helped reinstate gold’s role as a global safety net. Iran’s Foreign Minister Abbas Araghchi responded to Sunday’s U.S. strike with aggressive rhetoric, vowing defense by “any means necessary.” At the same time, the U.S. administration warned that further retaliation from Iran would prompt an even greater American military response. These developments have injected a fresh risk premium into XAU/USD, particularly as market participants reassess their exposure to equities and risk-on assets.

However, the risk is not unidirectional. Reports surfaced of Iran’s foreign minister traveling to Moscow on Sunday, signaling that diplomatic backchannels may be reactivating. Should these efforts materialize, the current risk premium in gold could unwind quickly, especially if U.S.–Iran relations de-escalate and oil prices stabilize. Traders should monitor developments closely, as even minor shifts in diplomacy could catalyze violent reversals in gold.

Gold Futures Performance: Strong Yearly Gains, Weekly Volatility

From a broader perspective, gold remains in an impressive long-term uptrend. Over the past year, gold futures are up 45.9%, rising from $2,331.20 in June 2024 to this week’s levels near $3,375. On a monthly basis, gold has added 2.2% since May’s opening price of $3,328, while weekly performance reflects a minor pullback of 1.2% from last Monday’s open of $3,442.

Last week’s weakness marked a modest 3% correction off April’s all-time high at $3,500, which had been driven by inflation fears and a surge in central bank buying. While profit-taking and a strong U.S. dollar weighed on prices, gold quickly bounced from the 20-day and 50-day simple moving averages, reinforcing their status as key support levels.

Technical Outlook: $3,322 and $3,300 Support in Play, $3,434–$3,452 Resistance Above

The current technical landscape remains tight, with XAU/USD trapped within a narrow consolidation range. On the downside, traders are watching the $3,322–$3,323 area, which aligns with the 200-period SMA on the 4-hour chart. A decisive break below this range opens the path toward $3,300, a level that has repeatedly acted as a floor since April.

To the upside, immediate resistance is found at the $3,400 round figure. If that threshold is cleared, momentum could carry gold toward $3,434–$3,435, with follow-through pushing into the $3,451–$3,452 area—a zone near the multi-month top printed last Monday. Beyond that, bulls will be eyeing the $3,500 all-time high, which coincides with the upper boundary of the current ascending channel and may present formidable resistance unless accompanied by fresh catalysts.

Technical indicators remain mixed. The Relative Strength Index (RSI) on the daily chart is drifting toward the neutral 50 mark, after peaking above 70 earlier this month. Meanwhile, the MACD has shown a bearish crossover with red histogram expansion, pointing to weakening momentum and the possibility of another retest of support.

Institutional Sentiment: Inflation Hedging, War Risk, and the Search for Stability

While there is no direct insider transaction equivalent for physical commodities, institutional sentiment can be gauged through ETF flows and futures positions. Gold’s resilience amid both the U.S. airstrike and hawkish Fed noise suggests institutional players are not selling aggressively. With persistent inflation risks from energy prices and trade tariffs, the case for holding gold remains structurally sound.

Gold is particularly favored in periods when equity volatility rises, and when bond yields fail to compensate for inflation. The weekend’s events may have reinforced this narrative, as investors increasingly seek insulation from unpredictable central bank policy shifts and headline-driven price shocks.

While speculative positioning has been lighter in recent weeks, the long-term view remains firm. Goldman Sachs continues to forecast gold reaching $3,700 by the end of 2025, driven by a combination of central bank demand, macroeconomic fragility, and dollar debasement via persistent U.S. deficits and protectionist policy.

Verdict on XAU/USD: Hold with Bullish Bias, Key Risk from Diplomatic Surprise

With gold hovering near $3,375, the market appears caught between the gravitational pull of geopolitical turmoil and the weight of technical resistance. As long as support at $3,322 holds and the Fed maintains a dovish tone, upside potential remains intact—especially if risk-off flows accelerate.

A break below $3,300 would challenge the bull thesis, while any successful breakout above $3,434 opens the runway to retest the all-time high at $3,500. The direction from here depends on how quickly the diplomatic situation between Iran, the U.S., and Israel stabilizes—and whether incoming PMI data reinforces economic uncertainty or restores confidence.

Gold retains its crown as the global hedge of choice—but for now, it’s walking a narrow path shaped by jets, rate cuts, and investor nerves.

That's TradingNEWS