Last Updated on 14/08/2026
- Gold extends its decline for a second straight day on Friday.
- Easing expectations for a Fed rate hike may help cushion further downside in the non-yielding precious metal.
- Ongoing geopolitical tensions could support the safe-haven US Dollar, potentially limiting gains in bullion.
Gold (XAU/USD) edges higher from around $4,300 heading into the European session on Friday, but remains in negative territory for a second consecutive day. The precious metal is attempting to stabilize after pulling back from $4,450, its highest level since June 5, reached the previous day. However, a mixed fundamental backdrop suggests caution before assuming the correction will extend.
US inflation data has strengthened expectations that the Federal Reserve may remain patient with interest rates. The US Producer Price Index (PPI) was flat in July, missing expectations for a 0.2% increase, while annual PPI inflation eased sharply to 4.7% from 5.5% in June and came in below the 4.9% forecast. Combined with Wednesday’s softer Consumer Price Index (CPI), the data points to moderating inflation and has kept the US Dollar under pressure, providing some support for non-yielding Gold.
Market expectations for Fed policy have shifted noticeably. The probability of a September rate hike has fallen to around 40%, compared with 72% at the end of July, while futures now price just over a 65% chance of a rate hike by year-end, down from nearly 85% a week earlier. Recent comments from Fed officials have also highlighted divisions over the appropriate policy path. Chicago Fed President Austan Goolsbee emphasized patience, arguing that recent price increases may be temporary, while Cleveland Fed President Beth Hammack maintained that inflation remains too high and could require additional rate increases.
Geopolitical tensions, however, could provide support for the safe-haven US Dollar and limit Gold’s upside. US officials have issued strong warnings toward Iran, while Tehran has vowed to make any potential conflict costly. Rising tensions around the Strait of Hormuz are adding to the war-risk premium, with the US claiming control over the strategic waterway and Iran threatening to keep it closed until its demands are met. Meanwhile, Iran-backed Houthis have intensified attacks on vessels in the Red Sea and Bab el-Mandeb Strait, raising concerns about a broader regional conflict.
Against this backdrop, Gold’s downside appears relatively limited, but the mixed fundamental picture makes aggressive directional bets risky. XAU/USD has so far stalled its broader monthly advance from around the psychological $4,000 level. Traders will now focus on upcoming US Retail Sales and the preliminary University of Michigan Consumer Sentiment data for fresh clues on the economic and monetary-policy outlook.
XAU/USD 4-Hour Chart – Technical Analysis
Gold remains above the 200-period Exponential Moving Average (EMA) on the 4-hour chart, while a cluster of Fibonacci support levels suggests that the broader bullish trend remains intact despite the recent correction. However, momentum has weakened. The MACD is trading below both zero and its signal line, while the Relative Strength Index (RSI) has slipped to around 42, indicating that buying pressure is losing strength.
On the downside, the first key support is the 38.2% Fibonacci retracement at $4,285, based on the latest move higher from the August swing low. A break below this level could expose the 50.0% retracement near $4,234, followed by the 61.8% level around $4,184. The 200-period EMA also provides additional support in this area.
On the upside, immediate resistance stands at the 23.6% Fibonacci retracement near $4,347. Beyond that, Gold faces a major barrier around the $4,448.40 cycle high. A sustained break above this level would reinforce the bullish outlook and potentially open the door to further gains.
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