Gold Edges Lower as Oil Rally Fuels Inflation Worries

Gold tumbled more than 3% on Monday, extending its decline after President Trump dismissed Iran’s proposal aimed at easing regional tensions and reopening the Strait of Hormuz. The move sent oil prices sharply higher, reigniting inflation concerns and strengthening expectations that the Federal Reserve could maintain a more aggressive stance on interest rates.

The precious metal slid to its lowest level in nearly two months, marking its steepest daily decline since August 28. The latest selloff reinforced the broader bearish trend from the August 25 peak at $4,697, following a decisive break below the key $4,630 support zone, which represented both a higher base and the 61.8% Fibonacci retracement of the $3,942 to $4,697 rally.

Bearish momentum intensified as gold broke beneath the ascending daily Ichimoku cloud, currently spanning between $4,287 and $4,383. This breakdown has shifted daily technical indicators into a fully bearish configuration, adding further pressure to an already deteriorating fundamental backdrop.

Sellers are now targeting support levels at $4,120, the 76.4% Fibonacci retracement of the recent rally, and the psychological $4,100 mark. A sustained break below these levels would expose the major psychological support at $4,000.

Meanwhile, the former support zone around $4,230 has now turned into resistance. Any corrective rebounds are expected to face selling pressure in this area, offering opportunities for traders to re-enter the prevailing bearish trend.

Res: 4200; 4230; 4250; 4280
Sup: 4140; 4120; 4045; 4020