Gold Struggles to Hold $4,200 as Fed Hike Bets and Iran Tensions Strengthen the Dollar

Gold (XAU/USD) traded near $4,200 per troy ounce during Monday's European session, stabilizing after a three-day slide to a one-week low. While the metal found modest footing on easing oil prices, a strengthening US Dollar driven by hawkish Fed expectations and renewed geopolitical tensions is keeping any meaningful recovery in check.

Iran Closes Strait of Hormuz — Again

The weekend brought a sharp deterioration in the geopolitical backdrop. Iran accused the US and Israel of ceasefire violations and announced the closure of the Strait of Hormuz, citing continued Israeli strikes in Lebanon. President Trump simultaneously threatened fresh military action against Iran if Hezbollah attacks on Israel persist.

This sequence of events highlights just how fragile the diplomatic framework remains — and sustains the geopolitical risk premium that has kept safe-haven USD demand elevated. Meanwhile, Russia's intensified strikes on major Ukrainian cities added a second layer of global uncertainty, further supporting the Greenback and capping gold's upside.

Fed's Hawkish Stance Remains the Primary Headwind

Beyond geopolitics, the more structural pressure on gold comes from the Federal Reserve. Markets are currently pricing in a nearly 90% probability of at least one rate hike before year-end, according to CME FedWatch data — a sharp repricing driven by last week's FOMC meeting.

New Fed Chair Kevin Warsh reinforced this signal during his post-meeting press conference, emphasizing price stability and indicating the central bank is in no hurry to cut rates even if economic growth softens. For gold — a non-yielding asset — rising rate expectations translate directly into a stronger dollar and higher opportunity cost, both of which erode the metal's investment appeal.

The USD has reflected this shift clearly: over the past seven days, the Dollar strengthened against every major currency, gaining 1.88% against the New Zealand Dollar and 1.68% against the British Pound.

Technical Picture: Bears Hold the Edge

From a technical standpoint, gold's failure last week to reclaim the 200-day Exponential Moving Average (EMA) near $4,334 — a former support now acting as resistance — signals that bears remain in control. The RSI hovering in the upper-30s reflects subdued buying interest, while the MACD remains in negative territory, suggesting downside momentum has not yet fully reversed.

Until gold closes decisively above $4,334 on a daily basis, bounces toward that level are likely to be treated as selling opportunities rather than trend reversals.

What Southeast Asian Traders Should Watch

For traders across Southeast Asia, gold currently sits in a difficult position — caught between geopolitical safe-haven support and macro headwinds from Fed policy. Two near-term catalysts deserve close attention: any fresh US-Iran headlines that could rapidly shift risk sentiment, and upcoming commentary from FOMC members that may further sharpen rate hike expectations.

Given this backdrop, chasing the current bounce carries meaningful risk. Waiting for a confirmed daily close above $4,334 before adding long exposure remains the more disciplined approach.

Sources: CME FedWatch, FXStreet, FOMC Meeting Minutes, USD Currency Heatmap Data