Key Moments
- Gold (XAU/USD) trades around $5,115 on Friday, marking a second weekly loss in the $5,000-$5,200 range.
- Oil-supply disruptions from the US-Iran conflict raise inflation concerns and drive a hawkish shift in global interest-rate expectations.
- US data show Core PCE rising 0.4% MoM and 3.0% YoY in January, while Q4 GDP grows 0.7% annualized, below forecasts.
Gold Under Pressure as Inflation Fears Rise
Gold (XAU/USD) remains under pressure on Friday, tracking a second consecutive weekly decline. The surge in oil prices linked to the US-Iran war fuels inflation worries and supports expectations for tighter global monetary policy. Rising interest rates continue to weaken demand for non-yielding assets like Gold.
XAU/USD is near $5,115, trading within a $5,000-$5,200 range. Traders are mostly ignoring recent US macro data, focusing instead on escalating geopolitical risks in the Middle East.
US Data Offer Limited Relief
The US Core Personal Consumption Expenditures (PCE) Price Index, the Fed’s preferred inflation measure, rose 0.4% month-over-month in January. This matched market expectations and the previous month’s pace.
Year-over-year, Core PCE increased 3.0%, slightly below the 3.1% consensus and unchanged from December.
US GDP for Q4 (second estimate) grew at an annualized rate of 0.7%, underperforming the 1.4% forecast and slowing from the prior 1.4% estimate.
| Indicator | Period | Actual | Forecast | Previous |
|---|---|---|---|---|
| Core PCE (MoM) | January | 0.4% | 0.4% | 0.4% |
| Core PCE (YoY) | January | 3.0% | 3.1% | 3.0% |
| GDP (annualized) | Q4 – second estimate | 0.7% | 1.4% | 1.4% |
Middle East Conflict Tightens Oil Supply
Instability near the Strait of Hormuz continues to unsettle energy markets. Iran’s Islamic Revolutionary Guard Corps (IRGC) effectively shut the critical shipping lane amid the US-Iran conflict.
The International Energy Agency warns this could be the largest global oil supply disruption ever. Iran’s new supreme leader, Mojtaba Khamenei, stated that closing the Strait of Hormuz should remain a “tool to pressure the enemy.”
With no signs of de-escalation, Gold faces opposing forces. Geopolitical tensions provide support, limiting losses. At the same time, rising interest rate expectations restrain gains, keeping prices in a sideways pattern.
Global Rate Outlook Turns Hawkish
Before the conflict, markets priced in at least two Fed rate cuts for 2026. Now, traders expect the Fed to keep rates unchanged, with only about 20 basis points of easing by December, according to Bloomberg interest-rate swaps.
Markets also anticipate a European Central Bank rate hike by July and increased chances of Bank of England tightening by year-end.
This shift drives the US Dollar and Treasury yields higher, pressuring Gold. The US Dollar Index (DXY) is above 100, its highest since November 2025. The 10-year Treasury yield trades near 4.25%, close to five-week highs.
Technical Picture: Gold Near Support
On the 4-hour chart, XAU/USD shows a slightly bearish short-term tone. Prices slipped below the 100-period Simple Moving Average (SMA) near $5,163 and are testing the 200-period SMA at $5,083.
A decisive break below $5,000 could shift attention to deeper support at $4,850 and $4,650. On the upside, sustained moves above $5,200 are needed to restore the broader uptrend.
The Relative Strength Index (RSI) is near 42, showing declining bullish momentum but remaining above oversold levels. The Average Directional Index (ADX) rises toward 20, indicating that trend strength is slowly rebuilding.
Gold Market Fundamentals: FAQs
Why invest in Gold?
Gold has been a store of value and medium of exchange for centuries. Beyond its shine and jewelry use, it is considered a safe-haven asset and a hedge against inflation and currency depreciation. Gold does not rely on any specific issuer or government.
Who buys the most Gold?
Central banks are the largest Gold holders. They diversify reserves to strengthen their currencies. In 2022, central banks added 1,136 tonnes of Gold worth around $70 billion, the highest annual purchase on record. Emerging economies such as China, India, and Turkey are rapidly increasing their reserves.
How is Gold correlated with other assets?
Gold usually moves inversely to the US Dollar and Treasuries. When the Dollar weakens, Gold tends to rise. Gold also moves inversely to risk assets: stock rallies can weaken it, while market sell-offs tend to support it.
What affects Gold prices?
Gold responds to geopolitical instability, recession fears, and interest rates. As a yield-less asset, it rises when rates fall and declines when rates increase. Most price moves depend on the US Dollar (XAU/USD). A strong Dollar can cap Gold prices, while a weaker Dollar can push them higher.
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