Gold remains unable to establish a sustained move above the $4,100 mark amid unfavorable fundamental conditions. Rising tensions between the United States and Iran, coupled with growing expectations of additional Federal Reserve rate hikes, continue to strengthen the US Dollar and limit upside momentum for the precious metal. Meanwhile, the technical outlook remains bearish, indicating that the path of least resistance for Gold prices is still to the downside.
Gold (XAU/USD) extends its recovery for a second consecutive session on Thursday, although gains remain limited as the metal continues to trade below the $4,100 level and stays within the previous day’s range during Asian trading hours. A modest rebound in the US Dollar (USD) following its post-FOMC decline is acting as a headwind for Gold. At the same time, escalating US-Iran tensions are fueling inflation concerns, reinforcing expectations that the US Federal Reserve (Fed) could still raise interest rates later this year. These factors continue to support the USD and weigh on the appeal of non-yielding assets such as Gold.
As expected, the Fed left interest rates unchanged at the conclusion of its two-day policy meeting on Wednesday. However, the central bank stopped short of delivering a more hawkish message, triggering weakness in the USD and helping Gold climb to its highest level of the week. Nevertheless, the decision was accompanied by three dissenting votes favoring a 25-basis-point increase. Markets also continue to anticipate at least one additional rate hike before year-end as inflation risks evolve amid volatile energy prices.
Analysts at TD Securities noted that precious metals have struggled under increasingly hawkish Fed expectations. The firm believes renewed strength in oil markets is likely to reinforce this trend, as higher energy costs could sustain inflationary pressures and strengthen the case for tighter monetary policy. As a result, Gold and other precious metals remain vulnerable to further downside pressure.
Oil prices continue to be driven primarily by escalating geopolitical tensions between the US and Iran, particularly around key maritime routes such as the Strait of Hormuz and the Bab el-Mandeb. The situation intensified after US forces carried out strikes against Iran following Iranian missile attacks on American military positions in the Middle East earlier this week. Additional joint US-Saudi operations targeting Iran-backed groups in Iraq have heightened fears of a broader regional conflict. Meanwhile, reports that Yemen’s Houthi forces may impose fees on commercial shipping through the southern Red Sea have added to concerns over global trade and energy flows.
These developments have compounded worries over potential disruptions to global oil supplies, contributing to a sharp rise in crude prices. The resulting increase in energy-driven inflation expectations has strengthened arguments for further Fed tightening. Investors are now focused on upcoming US economic data, including the Advance Q2 GDP report and the Personal Consumption Expenditures (PCE) Price Index, which could provide fresh insight into the Fed’s policy outlook. The results are expected to influence both the US Dollar and the next major move in Gold prices.
XAU/USD Daily Price Chart
From a technical standpoint, Gold’s price action over the past several weeks continues to resemble a bearish consolidation pattern following its breakdown below the 200-day Simple Moving Average (SMA). Despite the recent rebound from levels below $4,000, the broader technical structure suggests that sellers still retain the upper hand, keeping the overall bias tilted to the downside.
Momentum indicators present a mixed picture. The Moving Average Convergence Divergence (MACD) has crossed into positive territory, signaling an improvement in near-term momentum. However, the Relative Strength Index (RSI) remains below the neutral 50 mark, hovering around 48, indicating that bullish conviction is still lacking and that upside attempts may remain limited.
As a result, any further recovery is likely to encounter resistance near the upper boundary of the established trading range, with the $4,200 level acting as an important near-term hurdle. A decisive breakout above this zone could open the door for a stronger advance toward the 200-day SMA at $4,490.80, a critical technical barrier that bulls must reclaim to confirm a more sustainable bullish trend.
On the downside, initial support is located around the recent swing-low region between $3,976 and $4,000, where buying interest previously helped stabilize prices. Unless Gold can break convincingly above the 200-day SMA, any rallies are likely to be viewed as corrective moves within a broader consolidation phase that continues to favor bearish risks.
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