Gold price (XAU/USD) made intraday losses on Monday as it pulled back from the nearly two-month high price of $3,453 due to improvements in market sentiment and a small recalibration of the US Dollar (USD). However, gold was still able to stay well above the important $3,400 level, which indicates base bullish support ahead of pivotal macroeconomic events.
Risk Sentiment Pressures Gold but Geopolitical Uncertainty Offers Support
A spike in global equity markets and risk tolerance tempered traditional safe-haven assets, such as gold, during the European session. Investors disregarded an intensification of geopolitical uncertainty between Iran and Israel, which had buoyed gold to recent short-term high levels during the Asian hours.
Although missiles were fired by Israel into Iran, escalating tensions did not see a large market response. The Asian equity markets were largely in a risk-on tone, and investors remained relatively positive.
Uncertainty regarding former President Donald Trump’s trade policies also contributed to the geopolitical mold and helped gold to sustain more gains, while momentum began to slow.
Market Eyes Fed Policy Path as USD Holds Near Three-Week Lows
The USD enjoyed a minor intraday gain, but still trades near a three-week low, as markets begin to reflect a chance of Federal Reserve rate cuts late in 2025, which has limited gold’s downside (lower interest rates are good for non-yielding assets like gold).
Investors now look ahead to the Federal Open Market Committee (FOMC) meeting, which begins Tuesday with a policy decision on Wednesday. The Fed is expected to keep its rate decision unchanged, but any dovish tone could spark new upward momentum for gold.
Gold Bulls Still in Play
Gold continues to trade in a constructive technical framework, sustained by a rising trend channel and a continued breakout above the $3,400 level. Daily chart oscillators remain in the bullish zone, highlighting the potential strength underneath. This means that any pullback to the $3,400 level can be treated as a buying opportunity, but if prices fall below this level, it could create further downside to $3,360, the lower boundary of the channel, and potentially change the short-term view to bearish.
On the upside, a trade above $3,453 could open up the potential for a retest of the all-time high close to $3,500, which is a key psychological and technical resistance zone.
Conclusion
Gold will remain supported by geopolitical risks, a weaker dollar, and dovish Fed expectations despite some intraday weakness. With traders waiting on clarity from the FOMC meeting, the support zone of $3,400 continues to be a key battle zone in the market for XAU/USD. Any breakout or breakdown from this price range could determine the next major move in gold.
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