Gold weakens as escalating Iran tensions stoke inflation fears, bolster the US Dollar, and revive expectations of further Fed rate hikes.

• Gold attracts fresh selling pressure on Thursday as energy-led inflation concerns revive expectations of additional Fed rate hikes.
• Escalating tensions between the US and Iran underpin demand for the safe-haven US Dollar, weighing on the precious metal.
• The technical outlook remains bearish, suggesting the path of least resistance is tilted toward further downside.

Gold (XAU/USD) came under renewed selling pressure during Thursday’s Asian session, retreating toward the $4,025 area near the previous day’s swing low. Although recent US inflation data pointed to easing price pressures, elevated crude oil prices continue to fuel expectations that the Federal Reserve could still raise interest rates later this year. The prospect of tighter monetary policy lends support to the US Dollar (USD) and weighs on non-yielding Gold.

Data released by the US Bureau of Labor Statistics showed that the Producer Price Index (PPI) unexpectedly fell 0.3% in June following a revised 0.6% increase in May, while annual producer inflation slowed to 5.5% from 6.0%. The report followed a sharp decline in the Consumer Price Index (CPI), reinforcing signs that inflation pressures are moderating. As a result, traders reduced expectations for an imminent Fed rate hike, sending the USD to its weakest level since June 18 and helping Gold recover on Wednesday.

However, persistent energy-driven inflation risks continue to cloud the outlook. Crude oil prices remain near one-month highs as escalating US-Iran tensions and ongoing disruptions in the Strait of Hormuz raise concerns about global energy supplies. The US launched another wave of airstrikes against Iranian military targets on Wednesday, prompting retaliatory drone and missile attacks by Iran on US-linked facilities across the region. President Donald Trump also warned that additional Iranian infrastructure could be targeted if hostilities intensify.

Meanwhile, Iran’s Islamic Revolutionary Guard Corps threatened to broaden the conflict by targeting key regional energy routes, including shipping lanes near the Bab el-Mandeb Strait through its Houthi allies in Yemen. These developments continue to support oil prices, rekindling inflation concerns and strengthening the argument for at least one 25-basis-point Fed rate hike in 2026. Consequently, USD weakness may remain limited, while the broader outlook for Gold continues to favor further downside.

Gold Daily Chart

Gold remains under bearish pressure as XAU/USD continues to trade below its 200-day Simple Moving Average (SMA) and within a well-defined descending channel. While momentum indicators show signs of stabilization, they have yet to signal a meaningful bullish reversal. The Moving Average Convergence Divergence (MACD) remains slightly positive at 9.43, while the Relative Strength Index (RSI) hovers near 40.77, suggesting weak buying interest rather than a sustained recovery.

A confirmed break and daily close below the key psychological support at $4,000 could trigger a fresh wave of selling. Such a move would bring the June year-to-date low around $3,943–$3,942 into focus. Further downside pressure could then drive Gold toward the channel’s lower boundary near $3,675.71, a major structural support level. A decisive violation of this zone would strengthen the broader bearish outlook and open the door to deeper losses.

On the upside, immediate resistance is located near $4,093.63, corresponding to the upper boundary of the descending channel. Any recovery attempt is likely to encounter renewed selling interest in this region. A sustained breakout above this barrier would improve the technical picture and pave the way for a move toward the 200-day SMA around $4,495.94, which remains the next major resistance level.