Gold fell almost 1% in quiet Monday trading. US markets were closed for Presidents’ Day, and China was shut for the New Year. XAU/USD traded near $4,992 after hitting a daily high of $5,054, dropping below $5,000.
The US Dollar Index rose 0.22% to above 97.00, which pressured gold. Even so, markets still price in about 60 basis points of Federal Reserve rate cuts by year-end. That view remains in place despite last week’s strong US Nonfarm Payrolls report and softer inflation data.
Fed Signals And Yield Moves
US Treasury yields fell on Friday. The 10-year yield dropped five basis points to 4.05% after touching 4.125%. Chicago Fed President Austan Goolsbee said services inflation is still high, and he wants to see more progress on inflation before rates are cut.
Money markets expect the Fed to keep rates unchanged at the March 18 meeting, according to Prime Market Terminal data. This week’s US calendar includes Durable Goods Orders, housing data, Fed speakers, the FOMC Minutes, Initial Jobless Claims, the second estimate of Q4 2025 GDP, and core PCE inflation.
On geopolitics, Russia–Ukraine talks are scheduled in Geneva on February 17. Iran has also held naval drills in the Strait of Hormuz ahead of planned talks with Washington.
From a technical view, gold has posted three straight sessions of lower highs since the February 11 peak of $5,119. Resistance sits near $5,100. Support levels include the 20-day EMA, then $4,900, then $4,800. The 50-day EMA is at $4,634. Resistance levels to watch are $5,050 and $5,119.
Immediate Technical Bias
Gold has clearly broken below the $5,000 psychological level, which is bearish in the near term. A stronger US dollar is driving the move, and holiday-thin liquidity may be amplifying the price swings. For the next few days, traders may treat $5,000 as a new resistance level.
The main tension is whether markets should still expect 60 basis points of rate cuts while the Fed stays cautious and the data remains firm. Last month’s Core PCE came in at 3.1% year-over-year, showing inflation is still sticky and supporting the Fed’s careful approach. If markets reduce their rate-cut expectations, gold could face downside pressure.
A similar pattern played out in 2023. Markets repeatedly priced in a Fed pivot that did not happen. The Fed kept rates higher for longer, which supported the dollar and weighed on gold. That history is a reminder not to assume rate cuts are close.
Volatility is likely to rise this week with the FOMC Minutes and Core PCE on the calendar. Geopolitical risk is also increasing, with Iran’s naval drills and Russia-related talks. Implied volatility in crude oil futures has already jumped 15% over the past week. This backdrop can suit options strategies that benefit from larger price swings, such as long straddles.
For traders with a bearish view, buying put options with strikes near the next support at $4,900 could be a defined-risk way to benefit if higher inflation forces markets to reconsider dovish Fed expectations. A break below $4,900 could open a fast move toward $4,800.
At the same time, risk in the Strait of Hormuz matters. Any escalation could trigger a flight to safety. A lower-cost hedge could be far out-of-the-money call options, for example with a $5,150 strike. This can help protect against a sudden geopolitical shock without taking a large bullish position.
Overall, the dollar remains the key driver. The DXY reached as high as 114 in 2022, and at just above 97 today, it still has room to rise if the Fed stays firm. Further dollar strength is the biggest headwind for gold in the coming weeks.
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