Gold Holds Intraday Losses as Renewed Fed Tightening Expectations and Iran Tensions Boost US Dollar Demand

Gold comes under renewed selling pressure on Friday as the US Dollar rebounds from a six-week low. Rising tensions between the United States and Iran continue to fuel inflation concerns and reinforce expectations of further Federal Reserve tightening, lending support to the greenback. Meanwhile, bearish technical signals suggest that Gold could remain vulnerable to additional downside in the near term.

Gold prices remain under pressure during Friday’s Asian session, with XAU/USD struggling to sustain its recent rebound above the $4,100 level. A recovery in the US Dollar from its lowest point since mid-June, combined with persistent expectations that the Federal Reserve could still raise interest rates later this year, is weighing on demand for the non-yielding precious metal.

The pressure comes despite softer US economic data released on Thursday. The US economy expanded at an annualized pace of 1.5% in the second quarter, slowing from 2.1% previously and falling short of expectations. Inflation data also pointed to easing price pressures, as the headline Personal Consumption Expenditures (PCE) Price Index declined 0.1% in June, marking its first monthly drop since 2020. Annual headline inflation slowed to 3.7%, while core PCE, the Fed’s preferred inflation gauge, eased to 3.3%.

However, markets remain concerned that renewed volatility in oil prices could reignite inflation. Escalating tensions between the United States and Iran continue to threaten global energy supplies, with Washington launching new strikes against Iran following missile attacks on US forces. Iran has also rejected a proposal regarding shared oversight of the Strait of Hormuz, while Saudi Arabia is leading efforts to secure critical shipping routes against Houthi attacks. These developments have heightened fears of a broader regional conflict and helped support crude oil prices.

As a result, investors worry that higher energy costs could revive inflationary pressures and push the Fed toward a more hawkish policy stance. According to market pricing, traders still see a strong probability of at least one additional Fed rate hike before year-end. Elevated Treasury yields and renewed US Dollar strength continue to reduce the appeal of Gold, although the metal remains trapped within its multi-week trading range as investors await fresh catalysts for a decisive move.

Daily Price Chart of Gold (XAU/USD)

From a technical standpoint, Gold remains trapped within a month-long trading range that can still be viewed as a bearish consolidation pattern following its breakdown below the 200-day Simple Moving Average (SMA). While downside risks remain dominant, momentum indicators present a mixed picture. The MACD histogram has retreated from recent peaks but continues to hold in positive territory, while the Relative Strength Index (RSI) remains slightly below the neutral 50 level, suggesting a modest recovery attempt within an overall bearish environment.

On the upside, resistance is seen near the upper boundary of the current range around $4,175, followed by the key psychological level at $4,200. A decisive break above these barriers could trigger further gains toward the 200-day SMA at $4,490.81. A sustained move beyond this level would be needed to weaken the broader bearish outlook and support a stronger recovery.

On the downside, immediate support is located in the $3,976–$4,000 region, an area that previously attracted buying interest and helped stabilize prices. A break below this zone could reinforce bearish momentum and expose Gold to deeper losses.