Gold remains under pressure as buyers stay cautious despite a weaker US Dollar. Escalating US-Iran tensions, persistent inflation concerns, and expectations of further Fed tightening continue to support the greenback, while the technical outlook suggests bullion could face additional downside.
Gold (XAU/USD) extends its decline for a fourth consecutive session on Thursday, hovering near the one-week low around $4,020 reached the previous day. Renewed conflict between the United States and Iran has reignited inflation concerns and strengthened expectations that the Federal Reserve could resume tightening policy in 2026, weighing on the non-yielding precious metal during Asian trading. However, a softer US Dollar, pressured by the absence of a strongly hawkish signal in the latest FOMC Minutes, is helping to cushion gold’s losses.
The minutes from the Federal Reserve’s June 16–17 meeting, released Wednesday, showed policymakers remain divided on the future path of interest rates. Several officials suggested that the federal funds rate could end the year at or slightly below its current level. Combined with last week’s weaker-than-expected US Nonfarm Payrolls report, the minutes did little to significantly shift market expectations. Nonetheless, Fed officials emphasized that inflation risks remain skewed to the upside and acknowledged that further policy tightening may be necessary to bring inflation back toward the 2% target.
Market participants continue to assign roughly a 70% probability to a Fed rate hike in September. That outlook, together with escalating tensions in the Middle East, is preventing a deeper decline in the US Dollar. The latest developments saw US forces launch additional strikes against Iran following attacks on commercial vessels in the Strait of Hormuz. Tehran responded with continued strikes on US military assets in Bahrain and Kuwait, while President Donald Trump declared on Wednesday that the ceasefire with Iran had effectively ended.
Against this backdrop, the broader fundamental picture remains supportive of the US Dollar and suggests that any rebound in gold could face selling pressure. Investors are now awaiting US Weekly Initial Jobless Claims data and remarks from key Federal Reserve officials for fresh policy clues. Even so, market attention is likely to remain focused on developments in the Middle East, which could continue to drive volatility across global markets and create significant trading opportunities in gold.
Gold Daily Chart
Gold may continue to struggle in attracting significant buying interest as the technical outlook remains tilted to the downside.
From a chart perspective, XAU/USD retains a bearish near-term structure, trading below its 200-day Simple Moving Average (SMA) and remaining confined within a descending channel. Although the Moving Average Convergence Divergence (MACD) indicator has crossed into positive territory and the Relative Strength Index (RSI) has improved to 40.26 from previously oversold levels, momentum remains relatively weak. As a result, any recovery attempt could encounter stiff resistance near the upper boundary of the channel around $4,247.94.
For sentiment to improve meaningfully, gold would need to break decisively above the channel resistance, with the next major hurdle located at the 200-day SMA near $4,492.08. On the downside, immediate support is seen at the lower edge of the descending channel around $3,811.93. A move toward that area could attract renewed buying interest from longer-term bulls seeking to preserve the broader upward trend if the current corrective phase deepens further.
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