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Gold dives amid hawkish central banks and bullish USD; $4,400 back in sight

March 26, 2026

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Gold stalls the overnight rejection slide from the 100-day SMA, though buyers seem hesitant.
Geopolitical risks fuel inflation fears and Fed rate hike bets, lending some support to the USD.
The technical setup favors bears and warrants caution before positioning for any recovery.

Gold (XAU/USD) attracts heavy selling heading into the European session on Thursday and extends the previous day’s rejection slide from the 100-day Simple Moving Average (SMA). Moreover, hawkish central banks and a bullish US Dollar (USD) favor the XAU/USD bears, backing the case for a slide back towards challenging a technically significant 200-day SMA, around the $4,100 mark, or a four-month low set on Monday.

Despite US President Donald Trump’s ceasefire rhetoric, Iran publicly rejected claims of ongoing negotiations and said that there is no chance of a deal between the two adversaries. Moreover, Iran turned down a 15-point ceasefire proposal from the US and has reportedly set sweeping demands to wind down the widening Middle East conflict. Apart from this, the deployment of additional US troops in the region raises to the risk of further escalation of the conflict, which continues to underpin the USD’s global reserve currency status and, in turn, is seen weighing on the Gold price.

Meanwhile, energy infrastructure in Iran remains under pressure. Adding to this, the effective closure of the Strait of Hormuz acts as a tailwind for Crude Oil prices, fueling inflationary concerns and bolstering bets for a hawkish stance from major central banks, including the US Federal Reserve (Fed). In fact, traders have nearly priced out the possibility of any further rate cuts by the Fed and are rapidly increasing bets for a hike by the end of this year. This triggers a fresh leg up in US Treasury bond yields, which further supports the USD and contributes to driving flows away from the Gold.

The XAU/USD pair remains highly sensitive to geopolitical headlines, and volatility is expected to remain elevated amid speculation of a potential US ground operation to seize Iran’s key oil export hub at Kharg Island.