Gold edges lower to near $4,174 as US Dollar strength caps recovery

Gold edged lower Monday, trading near $4,174 an ounce, as a stronger US Dollar capped the precious metal's recovery from recent lows.

The US Dollar Index advanced during Asian trading, putting pressure on dollar-denominated commodities, according to market data. Bullion declined on the Multi Commodity Exchange of India, ending a four-day winning streak, exchange data showed. Spot gold had rallied more than 3 percent from its early-July low of around $4,050 before Monday's pullback.

The metal's four-day recovery had been driven by fading concerns over US monetary policy tightening, with traders pricing in a higher probability of rate stability. Monday's profit-taking emerged despite that backdrop, suggesting the dollar move outweighed the Fed narrative for now. Silver also declined on the MCX, tracking gold's move lower, exchange data showed. Gold prices fell in Vietnam and other Asian markets, local reports indicated, reflecting a broad pullback across the region.

Gold's next test will be whether it can hold above $4,100 support, a level last tested in late June. A sustained move above $4,200 would require a weaker dollar or a fresh catalyst, traders said. The metal remains about 8 percent below its all-time high set earlier this year, with the $4,500 level representing the next major psychological resistance.

The inverse relationship between the dollar and gold remains the dominant driver of near-term price action. A stronger greenback reduces bullion's appeal as an alternative asset and makes it more expensive for holders of other currencies. The US Dollar Index has recovered from its July lows, adding to headwinds for the metal.

Broader macro conditions present a mixed picture for gold. While easing Fed concerns typically support non-yielding assets like bullion, the dollar's renewed strength has offset that tailwind. COMEX gold inventories and ETF flow data in the coming sessions will provide further clues on institutional positioning. The market is also watching for any shift in Fed rhetoric that could alter the rate outlook.

For context, gold's year-to-date performance remains positive, supported by sustained central bank buying and elevated geopolitical uncertainty. The metal has gained about 15 percent in 2026, outperforming most major asset classes. However, the recent dollar strength introduces a near-term risk that could cap further upside, with traders eyeing the next US economic data releases for directional cues.

This article is for informational purposes only and does not constitute investment advice.