Gold (XAUUSD) Consolidation Holds as Inflation Eases and Global Tensions Rise

Gold (XAUUSD) prices rebounded from $3,271 and consolidated below $3,310 during Monday’s early Asian session. The rebound followed a softer-than-expected US PCE inflation report, which showed a 2.1% year-on-year increase in April, down from 2.3% in March, as shown in the chart below. This easing inflation supports the case for potential Federal Reserve rate cuts, which typically boost gold prices.

Moreover, geopolitical and trade tensions further supported gold prices. US President Donald Trump stated that China had not upheld its commitments under the trade agreement, contributing to increased market uncertainty. Meanwhile, hopes of renewed talks between Trump and President Xi add a layer of caution. These talks aim to resolve disputes about critical minerals.

On the other hand, rising tensions in the Middle East and Eastern Europe add to gold’s safe-haven appeal. Ukraine reportedly launched its largest long-range drone attack, targeting 40 Russian warplanes. Despite strong resistance at $3,360, weaker inflation data and global instability keep the bullish momentum intact. This week’s employment data release on Friday might be the key event for the major moves in gold prices.

Gold Technical Analysis

XAUUSD Daily Chart – Descending Channel

The daily chart for gold shows that the price is consolidating near the edge of a descending channel. The edge of the descending channel defines the key level at $3,360.

A break above $3,360 would signal a strong breakout and could initiate a move toward the $3,500 region. Moreover, the price trades above the 50-day and 200-day SMAs, indicating bullish price action.

XAUUSD 4-Hour Chart – Descending Channel

The 4-hour chart for spot gold shows that the price is consolidating below $3,360. The correction toward $3,245 found strong support, and the price has rebounded higher. A break above $3,260 will signal a move toward the $3,400 region.

Furthermore, a break above $3,400 would likely initiate a rally toward $3,500. The emergence of an inverted head and shoulders pattern supports a bullish outlook. However, a break below $3,245 would suggest further downside risk.

Treasury Yields (TNX) Technical Analysis

10-Year Treasury Note Yield Daily Chart – Consolidation

The daily chart for the 10-year US Treasury note yield shows that the price has failed at 4.60% for the fourth time since 2025. Despite this repeated failure, the price action remains above the 50-day and 200-day SMAs, suggesting underlying support. The 10-year Treasury yields are declining after hitting 4.62% and remain uncertain. A break above 4.70% would likely trigger a move toward the 5.00% level.

10-Year Treasury Note Yield 4-Hour Chart – Consolidation

The 4-hour chart for the 10-year US Treasury note yield shows consolidation between 4.10% and 4.80%. Despite the range-bound movement, an inverted head and shoulders pattern is observed around the 4.00% level, suggesting a bullish consolidation. However, a break below 4.00% would signal further downside risk.

US Dollar (DXY) Technical Analysis

US Dollar Daily – Bearish Pressure

The daily chart for the US Dollar Index shows that it is trading below the 50-day SMA. The recent rebound failed at the 50-day SMA and the key resistance level of 100.65. This failure at 100.65 signals strong bearish pressure and suggests the potential for further downside.

US Dollar 4-Hour Chart – Descending Channel

The 4-hour chart for the US Dollar Index shows that it has been trading within a descending channel since January 2025. An inverted head and shoulders pattern formed around the 97 level, but the failure to break above 102 suggests the index remains under bearish pressure and is likely to continue drifting toward 97. A break below 97 and 96 would guide the momentum towards 90 level.