Last Updated on 06/07/2026
Gold finds it difficult to build on its modest gains during the Asian session and remains below a newly established two-week high reached just above the $4,200 level. The US Dollar draws support from safe-haven demand as investors remain cautious over ongoing uncertainties related to tensions in the Strait of Hormuz, creating pressure on the precious metal. Nevertheless, expectations for fewer interest-rate hikes from the US Federal Reserve continue to limit the Dollar’s upside, preventing buyers from taking more aggressive positions.
Technical Analysis of XAU/USD
Friday’s break above the 100-period Simple Moving Average (SMA) on the four-hour chart, followed by a move through the 23.6% Fibonacci retracement of the April-to-June decline, provided a significant boost for XAU/USD bulls. In addition, the Relative Strength Index (RSI), which remains elevated near 63, together with a positive Moving Average Convergence Divergence (MACD) signal, suggests that bullish momentum is still intact despite Gold consolidating below its recent highs.
As a result, any pullback below the 23.6% Fibonacci level around $4,164 could attract buying interest near the 100-period SMA, which is positioned around $4,147 and may act as an important support zone. A decisive drop beneath this level, however, could pave the way for a deeper decline toward the key structural support area near $3,940.
On the upside, the first resistance is located around the 38.2% Fibonacci retracement at $4,302. Beyond that, the next targets are the 50% retracement level near $4,415 and the 61.8% Fibonacci level around $4,527. A sustained advance could then bring the 78.6% retracement at $4,686 into focus, with the April swing high near $4,889 marking the next major bullish objective.
Fundamental Analysis
Although the interim agreement between the US and Iran remains in place, tensions in the Strait of Hormuz continue to simmer as Tehran moves to strengthen its influence over the vital shipping route. Over the weekend, Iran’s ambassador to China indicated that the country intends to impose new service charges on vessels transiting the strait, a proposal that has already been opposed by the United States. These developments have kept geopolitical concerns elevated, boosting safe-haven demand for the US Dollar and creating some near-term pressure on Gold prices.
At the same time, expectations for further interest-rate hikes by the US Federal Reserve have eased following weaker-than-expected US labor market data released last Thursday, which pointed to moderating employment conditions. Lower inflation concerns, reinforced by the recent decline in Crude Oil prices, could also give the Fed greater flexibility to maintain a cautious policy stance. As a result, prospects for an extended period of restrictive monetary policy have softened, limiting the Dollar’s upside potential and helping to cushion Gold from a deeper pullback.
Supporting the longer-term bullish case for the precious metal, a recent survey by the World Gold Council found that central banks are increasingly viewing Gold as a safeguard against inflation, financial instability, and geopolitical uncertainty. Nearly 90% of surveyed institutions expect global central-bank gold holdings to rise over the coming year. In addition, the European Central Bank recently reported that Gold has surpassed US Treasuries as a reserve asset in global allocations. The People’s Bank of China also continued its accumulation trend, adding 320,000 ounces of Gold in May and extending its buying streak to 19 consecutive months.
Looking ahead, investors will closely monitor the release of the US ISM Services PMI, while remarks from key members of the Federal Open Market Committee (FOMC) could influence US Dollar sentiment during the North American session. Even so, the broader fundamental backdrop remains supportive for Gold. Consequently, any short-term declines are likely to attract fresh buying interest, suggesting that the recent rebound from the year’s low may still have room to extend.
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