Gold prices fell 1.5% during Monday’s trading, trading below the key level of $4,300 per ounce, and erased the previous session’s gains of 0.75%.
The yellow metal is currently trading near the first support level of $4,280; if it breaks below this level and stabilizes beneath, it is likely to suffer further losses, targeting the next support level at $4,210. s
If gold succeed in breaking above the weekly pivot point of $4,361, it would test resistance levels near $4,390 then $4,512.
In terms of geopolitical tension, diplomatic efforts to quell that longstanding conflict and restart activity in a vital oil shipping lane appear to have stumbled.
A key meeting between Gulf powers and Iran has been postponed, after it was initially slated to take place on Monday. The foreign minister of Oman, who has been seeking a deal over the Strait of Hormuz with Tehran, said the regional gathering was delayed “in the interests of consensus.”
Iran’s foreign ministry added that the country would coordinate with Oman to set up another suitable date for the meeting, according to the Fars news agency. Previously, Iranian officials had said they would present an agreement with Oman to Gulf Arab states on reopening Hormuz, a narrow waterway bordered by Iran and Oman through which roughly a fifth of the world’s oil and liquefied natural gas flowed before fresh fighting in the Middle East began in late February.
At the same time, strikes on Saudi Arabia by Iran-backed Houthi militants in Yemen caused the closure of a critical oil pipeline, while attacks on vessels in the Gulf threatened to compound supply disruptions. Brent crude futures, the global oil benchmark, spiked, briefly topping $108 a barrel.
On the economic data front, a bumper week for central bank interest rate decisions lies ahead, punctuated by a critical two-day Federal Reserve policy meeting.
The Fed is widely expected to raise interest rates after the gathering concludes on Wednesday, as policymakers look to corral inflation.
Data last week showing firmer-than-anticipated underlying U.S. consumer price growth in August helped bolster the case for a borrowing cost increase. While stocks can be dented by elevated rates, analysts have suggested that such a move could ease recent investor worries around the Fed’s independence and credibility.
Fed chair Kevin Warsh, for his part, has largely been determined not to present a detailed roadmap for borrowing costs, offering vague outlines instead. At a recent speech, he said only that the central bank must be confident underlying inflation is moving to “our objective, clearly and at sufficient speed.”
Complicating matters for Warsh is the presence of the man who appointed him as Fed Chair earlier this year, President Donald Trump. The president has threatened to cut off a large portion of U.S. trade should the Fed raise rates.