On Tuesday, gold (XAU/USD) is trading within a narrow range, as investors remain cautious and avoid opening aggressive positions ahead of a busy week filled with monetary policy decisions from major central banks. Pressure on the precious metal is easing somewhat due to a weaker U.S. dollar and declining Treasury yields, which helps limit losses in gold.

Focus on central banks and inflation risks

Expected decisions from major regulators—the Federal Reserve (Fed), European Central Bank (ECB), Bank of England (BoE), Bank of Japan (BoJ), Bank of Canada (BoC), and Swiss National Bank (SNB)—come at a time when markets are highly sensitive to any policy signals. Although most analysts expect rates to remain unchanged, attention will be focused on central bank rhetoric and their assessment of the future path of monetary policy.

Rising oil prices amid the ongoing confrontation between the United States and Iran have revived inflation concerns, strengthening expectations that central banks will keep rates higher for longer than previously anticipated. A more hawkish interest rate stance increases pressure on gold, as the cost of holding the asset rises due to higher opportunity costs. Since the escalation of the Middle East conflict, gold has shown a steady decline, reflecting a shift in global expectations toward a prolonged period of monetary tightening. Traders now expect only a 25-basis-point rate cut from the Fed by the end of the year, compared to more than 50 basis points previously expected.

According to the CME FedWatch Tool, the Fed is most likely to keep rates unchanged at its April, June, and July meetings. The most probable timing for the start of a rate-cutting cycle has shifted to September, with a probability of about 50.8%.

Geopolitical tensions support gold

Escalation in the Strait of Hormuz remains an additional source of uncertainty, sustaining interest in gold and limiting deeper corrections. The conflict involving the United States, Israel, and Iran shows no clear signs of de-escalation, while disruptions to shipping continue, maintaining tension in energy markets.

White House adviser Kevin Hassett, in an interview with CNBC, expressed hope that the situation could stabilize within four to six weeks, noting that negotiations are "ahead of schedule" and that the conflict could end soon.

At the same time, U.S. President Donald Trump called on countries dependent on this strategic route to help ensure safe passage through the strait. However, international support for the U.S. initiative remains limited. Japan's defense minister stated there are no plans to send ships, UK Prime Minister Keir Starmer emphasized that London "does not intend to be drawn into a larger conflict," and Spanish Foreign Minister Jose Manuel Albares noted that "steps that could escalate the situation should be avoided."

The Secretary-General of the International Maritime Organization (IMO), Arsenio Dominguez, told the Financial Times that even naval escorts do not "guarantee full safety" for vessels passing through the Strait of Hormuz and warned that such measures cannot serve as a "sustainable long-term solution."

Technical outlook

From a technical perspective, the Relative Strength Index (RSI) has moved into negative territory, indicating that bearish sentiment is gaining priority in the market. Key support remains at the 50-day SMA on the daily chart. A break below this level would accelerate the decline toward $4850. However, if prices move above the 20-day SMA, bulls may regain a chance to challenge for market control.