Gold Falls Toward $4,050, Hitting a New Two-Week Low as Stronger Dollar Weighs on Prices

Gold remained under pressure, extending its decline as growing expectations of additional Federal Reserve rate hikes continued to strengthen the US Dollar. Meanwhile, easing inflation concerns provided little incentive for buyers to return to the market, leaving the precious metal vulnerable. With technical indicators still pointing lower, traders are increasingly focused on upcoming US PCE inflation data for clues on the Fed’s next policy move.

Gold (XAU/USD) remains under pressure for a second consecutive session, marking its fifth decline in the last six trading days, and slips to its lowest level in nearly two weeks during Wednesday’s Asian trading hours. Although falling crude oil prices have helped ease inflation concerns, markets are increasingly pricing in the possibility of another interest rate hike from the US Federal Reserve in 2026. This expectation has lifted the US Dollar (USD) to its strongest level since May 2025, reducing demand for non-yielding assets such as gold.

Oil prices have dropped sharply over the past month and reached their lowest point since early March on Wednesday following the gradual reopening of shipping routes through the Strait of Hormuz. According to Iran’s Fars News Agency, a military source confirmed that a limited number of vessels are being permitted to transit the waterway each day under the supervision of Iran’s Revolutionary Guards Navy. At the same time, the US Treasury granted a temporary 60-day sanctions waiver allowing the production, transportation, and sale of Iranian crude oil and petrochemical products. These developments have eased concerns about global energy supplies, keeping downward pressure on oil prices and reducing inflationary risks.

Despite softer inflation expectations, investors have strengthened their bets that the Fed could raise interest rates by at least 25 basis points in 2026 after last week’s hawkish policy guidance. Nine out of the Fed’s 19 policymakers indicated that further tightening may be necessary to keep inflation under control. Reinforcing this view, newly appointed Fed Chair Kevin Warsh emphasized the importance of price stability during his post-meeting remarks, signaling that the central bank may be reluctant to cut rates even if economic growth slows.

Meanwhile, conflicting signals surrounding Iran’s nuclear program continue to support the US Dollar. US Vice President JD Vance stated on Monday that negotiations in Switzerland had led Iran to agree to allow inspectors from the International Atomic Energy Agency (IAEA) access to its nuclear facilities. President Donald Trump also claimed that Tehran had accepted the highest level of nuclear inspections for the foreseeable future. However, Iran’s foreign ministry, quoted by state media, denied making any new commitments regarding inspections. The uncertainty surrounding these negotiations maintains geopolitical risk in the market, supporting the dollar and adding further downside pressure to gold prices.

Market participants are now awaiting Thursday’s release of the US Personal Consumption Expenditures (PCE) Price Index, which could provide fresh direction for both the dollar and gold markets.

XAU/USD 4-hour chart

Following several failed attempts to break above the 100-period Simple Moving Average (SMA) on the 4-hour chart, a decisive move below the $4,100 level could provide fresh momentum for XAU/USD sellers. Technical indicators continue to favor the downside, with the Relative Strength Index (RSI) lingering near oversold territory around 31, while the Moving Average Convergence Divergence (MACD) remains firmly negative and continues to trend lower. Although occasional short-covering rallies may occur, the broader technical outlook suggests that bearish pressure remains intact, increasing the likelihood of a move back toward the year-to-date low around $4,024-$4,023, which was recorded earlier this month.

On the upside, the 100-period SMA at $4,287.33 represents the first significant resistance level. A sustained break above this barrier would be required to weaken the current bearish outlook and potentially pave the way for a broader consolidation phase. Until such a breakout materializes, rallies into the $4,280-$4,290 zone are likely to attract renewed selling interest, particularly as momentum indicators continue to show little evidence of a lasting bullish reversal.