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Gold prices inched higher on Monday, supported by bargain hunting and slightly softer expectations for interest rate hikes, although the metal remains on track for its steepest monthly decline in nearly two decades.
Spot gold rose 0.2% to $4,503.29 per ounce as of 16:25 ET (20:25 GMT), while gold futures gained 0.2% to $4,532.51 per ounce. The modest rebound follows a sharp selloff that saw prices briefly fall to around $4,000 per ounce last week, before recovering toward the $4,500 level. Despite the recovery, gold is still down more than 14% over the past month.
Other precious metals also posted mild gains, with silver rising 0.3% to $69.9725 per ounce and platinum advancing 0.5% to $1,896.15 per ounce.
Technical rebound meets resistance
Analysts at OCBC said the recent rebound in gold appears largely technical, following a steep correction since the onset of the Middle East conflict in late February. Momentum indicators, including the Relative Strength Index, have recovered from oversold levels, suggesting that selling pressure may be easing in the short term.
However, the sustainability of the recovery remains uncertain. Key resistance levels for spot gold are seen at $4,624, $4,670, and $4,850 per ounce, which could limit further upside unless supported by stronger fundamental drivers.
Macro headwinds remain a key challenge. Elevated energy prices risk fueling inflation, which in turn could push Treasury yields higher and create a less favorable environment for non-yielding assets such as gold.
Interest rate outlook weighs on bullion
Market expectations for monetary policy continue to pressure gold. Bets on interest rate cuts this year have largely faded, while expectations for potential rate hikes have gained traction, reducing the appeal of the precious metal.
Gold typically underperforms in higher interest rate environments, as rising yields increase the opportunity cost of holding non-yielding assets.
Comments from Jerome Powell provided some support to gold, after he stated that long-term inflation expectations remain “well anchored,” despite potential short-term increases driven by rising oil prices.
According to market pricing tools, expectations for rate cuts have been largely removed, although projections for further rate hikes eased slightly following Powell’s remarks. He emphasized that monetary policy is currently well positioned to assess the impact of higher energy prices on inflation and economic activity.
Geopolitical risks remain in focus
Gold markets continue to be influenced by developments in the Middle East, where the risk of escalation remains high. Over the weekend, Yemen’s Iran-aligned Houthi group launched attacks on Israel, raising concerns about the opening of a new front in the conflict and potential disruptions to shipping routes in the Red Sea.
At the same time, Donald Trump reiterated threats to target Iran’s energy infrastructure, including key export hubs, if a deal is not reached. He also indicated that discussions were ongoing with what he described as a more cooperative leadership in Tehran.
Iran has largely rejected the prospect of direct negotiations with the United States, describing Washington’s demands as excessive, while tensions have been further heightened by reports of increased U.S. troop deployments in the region.
Outlook
Gold remains caught between competing forces. While technical factors and short-term dollar weakness are providing some support, rising yields, persistent inflation risks, and geopolitical uncertainty continue to cap gains.
As markets navigate a complex mix of macroeconomic and geopolitical drivers, volatility in gold prices is likely to remain elevated in the near term.
