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On Monday, gold traded at $3,360 per troy ounce as markets nervously monitor developments in the Middle East.

Washington’s involvement in the conflict has heightened fears of potential retaliation from Tehran. Particularly concerning is the potential disruption of key Middle Eastern oil supply routes. Iran, one of the world’s largest oil producers and exporters, controls the Strait of Hormuz – a critical maritime passage accounting for 20-30% of global oil shipments.

According to state media, Iran’s parliament backed a proposal on Sunday to close the strait. However, the final decision rests with the Supreme National Security Council and the country’s Supreme Leader.

By this morning, exchanges had already priced in the weekend’s volatility and are now consolidating as traders await further developments. Since the start of the year, gold prices have surged by nearly 30%.

This week, market participants are also focused on speeches by Federal Reserve officials, including Chair Jerome Powell, who will testify before Congress in a two-day hearing. Discussions are expected to cover the economic impact of Trump’s trade tariffs and the strikes on Iran.

Key macroeconomic data releases include core inflation (excluding food and energy), initial jobless claims, and PMI business activity indices. These reports could influence the Fed’s next policy moves.

Technical analysis: XAU/USD

H4 Chart:

(Click on image to enlarge)

The XAU/USD pair has formed a consolidation range near 3,388 before breaking downward. Further downside is expected towards 3,323 (first target), followed by a possible corrective wave back to 3,388. This scenario is supported by the MACD indicator, where the signal line remains below zero and points sharply downward.

H1 Chart:

(Click on image to enlarge)

The market completed a corrective wave to 3,396 before reversing in an impulsive move towards 3,359. A consolidation range is now forming around this level, with expectations of a downward breakout towards 3,323 (first target). Upon reaching this level, a potential correction back to 3,388 could follow. The Stochastic oscillator supports this outlook, with its signal line below 50 and trending sharply downward towards 20.
 

Conclusion

Gold remains highly sensitive to geopolitical tensions in the Middle East, while technical indicators suggest further volatility ahead. Traders should monitor Fed commentary and key economic data for directional cues.

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