XAU/USD holds above $4,050 as easing inflation fears curb Fed hike bets; USD bounce caps gains

• Gold kicks off the new week on a positive note, though it lacks any follow-through buying.
• Falling oil prices ease inflation fears and temper Fed hike bets, supporting the commodity.
• A modest USD bounce from its lowest level since June 17 caps gains for the XAU/USD pair.

Gold (XAU/USD) struggles to capitalize on a modest weekly bullish gap opening and remains below the $4,100 mark through the Asian session. The US Dollar (USD) stages a modest recovery from its lowest level since June 17 and turns out to be a key factor acting as a headwind for the commodity. The upside for the USD, however, seems limited amid renewed hopes for a US-Iran peace deal and receding US Federal Reserve (Fed) rate hike expectations, which, in turn, helps the non-yielding bullion to preserve gains above the $4,050 level.

US President Donald Trump called off planned attacks on Iran over the weekend, claiming that Mideast allies have reached the parameters of a deal on Tehran’s nuclear program and the full reopening of the Strait of Hormuz. Trump further told reporters that the US and Iran are set to resume negotiations Monday afternoon, fueling optimism over a diplomatic resolution to end the five-month-old war. Adding to this, the OPEC+ decision on Sunday to increase production in September triggered a steep decline in crude oil prices. This eases inflation fears and tempers bets for a more aggressive Fed policy tightening, which should keep a lid on any meaningful USD appreciation and support the Gold price.

Traders, however, seem hesitant to place fresh bearish bets around the USD and opt to wait for further developments around the Middle East crisis. Hence, the focus remains glued to incoming geopolitical headlines, which might continue to infuse volatility in financial markets and drive the USD demand. Apart from this, traders will take cues from important US macro data, scheduled at the start of a new month, for some meaningful impetus. A busy week kicks off with the release of the US ISM Manufacturing PMI later this Monday. The market attention, meanwhile, stays on the crucial US monthly employment details, popularly known as the Nonfarm Payrolls (NFP) report on Friday.

XAU/USD daily chart

Technical Analysis: Gold remains confined in a familiar range as bulls seem hesitant below $4,100

From a technical perspective, nothing seems to have changed much as the XAU/USD pair remains confined in a familiar range below the 200-day Simple Moving Average (SMA). Against the backdrop of the recent downfall, this might still be categorized as a bearish consolidation phase and suggests that the path of least resistance for the Gold price remains to the downside.

Meanwhile, the Moving Average Convergence Divergence (MACD) indicator (12, 26, close, 9) stays in positive territory with a reading near 11.6, hinting at tentative upside momentum. However, the Relative Strength Index (14) at 47.1 remains neutral and suggests only limited directional conviction. Hence, any further move up might struggle to find acceptance above $4,100.

The said handle is followed by the top boundary of the trading range, just ahead of the $4,200 mark, which, if cleared decisively, could lift Gold to the 200-day SMA near $4,490.33. Bulls would need to reclaim a technically significant barrier to alleviate the prevailing bearish tone and reopen the path toward higher highs.

On the downside, immediate support is inferred from recent swing lows around the $3,976–$4,000 area, where buyers previously emerged. A convincing break below would be seen as a fresh trigger for bearish traders and turn the XAU/USD pair vulnerable to further declines.

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