Gold (XAU/USD) remains under pressure on Monday, trading below the key psychological level of $4,100.

A modest decline in demand for the U.S. dollar is providing some support for the precious metal, although the overall market backdrop remains bearish.

Market sentiment has been further unsettled by escalating tensions between the United States and Iran, as well as the risk of a closure of the Strait of Hormuz. These developments have pushed oil prices higher, intensifying inflation concerns. In turn, this has strengthened expectations of tighter monetary policy by the U.S. Federal Reserve, which is likely to limit further weakness in the U.S. dollar while continuing to weigh on non-yielding gold.

Over the weekend, the United States launched a series of large-scale strikes against Iran, after which Tehran responded with missile attacks on U.S. military bases in the Persian Gulf. In addition, Iran's Islamic Revolutionary Guard Corps (IRGC) attacked another commercial vessel in the Strait of Hormuz and announced the closure of this strategically important shipping route. These developments have increased uncertainty in global energy markets and triggered another rise in oil prices, fueling concerns about energy-driven inflation and strengthening expectations of additional U.S. interest rate hikes.

According to the CME Group FedWatch Tool, market participants currently assign nearly a 90% probability to another Federal Reserve rate hike before the end of the year. The overall backdrop remains supportive of the U.S. dollar, as elevated U.S. Treasury yields have helped the currency recover from Friday's low. However, dollar bulls remain cautious and appear reluctant to take aggressive positions before receiving fresh guidance from the Federal Reserve.

For this reason, investors will closely watch Federal Reserve Chair Kevin Warsh's testimony before Congress later this week. In addition, traders should pay close attention to the release of the U.S. Consumer Price Index (CPI) on Tuesday and the Producer Price Index (PPI) on Wednesday. These key inflation indicators could significantly influence the U.S. dollar's short-term direction and provide fresh momentum for the precious metal.

Nevertheless, the current fundamental backdrop continues to favor gold sellers, suggesting that any further upside is likely to face limited buying interest.

From a technical perspective, gold remains well below its 200-day Simple Moving Average (SMA), maintaining a bearish bias.

The Relative Strength Index (RSI) is trading near the 40 level, while the MACD histogram, although retreating from its recent highs, continues to show moderately positive momentum. This suggests that downside momentum remains relatively limited.

The nearest significant support is located around $4,000, followed by the yearly low near $3,940. A decisive break below this area would expose the metal to deeper losses.

On the other hand, the 20-day SMA continues to cap price advances. A sustained move above this moving average would improve the technical outlook and open the way for further gains.

The table below shows the U.S. dollar's percentage change against the major currencies today. The U.S. dollar posted its strongest performance against the Japanese yen.