Gold (XAU/USD) continues its decline toward the March low. The escalation of military confrontation between the United States and Iran is increasing inflation risks and supporting expectations of monetary policy tightening by central banks, which is driving outflows from the non-yielding precious metal.

Additional downward pressure is being generated by technical selling following the break below the key 200-day Simple Moving Average (SMA). At the same time, the current decline is largely ignoring the weakening of the U.S. dollar, which would typically provide support to commodity assets.

On Tuesday, the United States carried out strikes on Iranian targets, stating that the actions were taken in self-defense following an incident involving a downed Apache helicopter in the Strait of Hormuz. In response, the Islamic Revolutionary Guard Corps (IRGC) reported attacks on military facilities in Jordan, Kuwait, and Bahrain, where U.S. forces are stationed, and warned of stronger measures if U.S. pressure continues. Iranian Foreign Minister Abbas Araghchi also emphasized that any threats or attacks would not go unanswered, urging the United States to leave the region to avoid further escalation. Against this backdrop, an elevated geopolitical risk premium persists, helping oil prices remain above recently reached two-month lows.According to the CME Group FedWatch Tool, the probability of a Federal Reserve rate hike by the end of the year is estimated by the market at around 75%, amid concerns over persistently high inflation driven by expensive energy prices. At the same time, market participants are taking a wait-and-see approach toward the U.S. dollar, preferring to wait for the upcoming inflation data release. The upcoming Consumer Price Index (CPI) report will be a key factor in shaping the Federal Reserve's monetary policy trajectory and may therefore set the direction for the dollar's performance. Against this backdrop, fundamental factors continue to exert pressure on gold prices.

From a technical perspective, the recent break below the 200-day Simple Moving Average (SMA) has created favorable conditions for bears. Moreover, consolidation below the 200-day SMA reinforces the negative short-term outlook and increases the likelihood of further price declines. Oscillators remain negative, while the Relative Strength Index (RSI) is already in oversold territory. Taken together, these factors leave gold vulnerable to further downward movement, with the potential for a retest of the March low around $4,100. The nearest resistance is located at 4,260, followed by the 200-day EMA and SMA.