Key Moments
- XAU/USD retreats from a three-week peak hit during the Asian session and moves back toward the $4,700 area.
- Markets focus on upcoming US CPI data, which is expected to guide Fed rate expectations and the next directional move in gold.
Macro Drivers: Middle East Risks and Fed Expectations
Gold (XAU/USD) extends its intraday decline from a three-week high reached in Asian trading on Tuesday, slipping back toward the $4,700 level as investors wait for the latest US consumer inflation report. Over the near term, the metal is contending with a stronger US Dollar, supported by renewed geopolitical risk and expectations for tighter monetary policy.
Fresh negative developments around the Middle East conflict have reduced hopes for a US-Iran peace agreement and bolstered demand for the US Dollar as a reserve asset. The diplomatic setback is also helping to keep Crude Oil prices elevated, reinforcing concerns about inflation and expectations that major central banks – including the Federal Reserve – may need to maintain or adopt a more hawkish stance. That backdrop is contributing to a modest rise in the greenback and limiting upside for the non-yielding precious metal.
US President Donald Trump dismissed Iran’s proposal to end a more than two-month-old conflict amid disagreements over Tehran’s nuclear program and a standoff over the critical Strait of Hormuz. Furthermore, CNN reported that Trump has grown impatient with the continued closure of the strategic waterway and also frustrated with how the Iranians are handling negotiations to end hostilities. Adding to this, some Trump aides say that he is now more seriously considering a resumption of major combat operations than he has in recent weeks. This sparks fears of a fresh escalation in the conflict and further benefits the USD, exerting some downward pressure on the Gold price.
Focus on US CPI and Fed Policy Path
In interest-rate markets, participants continue to assign roughly a 25% probability that the Federal Reserve will deliver an additional hike by year-end, amid concerns that war-related gains in energy prices could re-ignite inflation pressures. As a result, attention is centered on the upcoming US Consumer Price Index release, which is expected to be pivotal for Fed policy expectations and the trajectory of the US Dollar.
These hawkish Fed expectations are offering another layer of support to the greenback and are a key factor behind bullion’s intraday pullback from the $4,773-$4,774 zone. That said, the absence of aggressive follow-through selling in gold suggests some investors are wary of establishing strong bearish positions before seeing the CPI data.
Technical Picture: Bullish Structure Intact Above Key Levels
From a technical standpoint, XAU/USD showed resilience on Monday when it briefly traded below the 100-period Simple Moving Average on the 4-hour chart, then rebounded. The bounce from the 38.2% Fibonacci retracement of the April-May decline and the subsequent move through the 61.8% retracement supports a constructive outlook for bullish participants.
Momentum gauges also point to a still-positive, though not strongly trending, backdrop. The Relative Strength Index sits near 58, indicating moderate bullish momentum, while the Moving Average Convergence Divergence histogram is hovering just under the zero line.
On the upside, initial resistance is located at the 61.8% Fibonacci retracement near $4,742. Above that, the next barriers are at the 78.6% retracement level around $4,807 and the recent swing high at $4,890.
On the downside, first support emerges at the 50.0% retracement close to $4,696, followed by the 100-period SMA around $4,671 and the 38.2% retracement near $4,651. A more pronounced decline would open the way toward the 23.6% retracement around $4,594 and a structural support area near $4,503.
(The technical analysis of this story was written with the help of an AI tool.)
US Dollar Performance Against Major Currencies
The table below shows the percentage change of the US Dollar (USD) versus major peers today, with the USD strongest against the Japanese Yen.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | 0.24% | 0.27% | 0.28% | 0.11% | 0.28% | 0.15% | 0.25% | |
| EUR | -0.24% | 0.02% | 0.04% | -0.16% | 0.03% | -0.11% | 0.01% | |
| GBP | -0.27% | -0.02% | 0.02% | -0.19% | 0.00% | -0.13% | -0.01% | |
| JPY | -0.28% | -0.04% | -0.02% | -0.21% | -0.03% | -0.15% | -0.06% | |
| CAD | -0.11% | 0.16% | 0.19% | 0.21% | 0.17% | 0.05% | 0.15% | |
| AUD | -0.28% | -0.03% | -0.01% | 0.03% | -0.17% | -0.12% | -0.03% | |
| NZD | -0.15% | 0.11% | 0.13% | 0.15% | -0.05% | 0.12% | 0.10% | |
| CHF | -0.25% | -0.01% | 0.01% | 0.06% | -0.15% | 0.03% | -0.10% |
The heat map above reflects percentage moves of major currencies relative to one another. The base currency is chosen from the left column and the quote currency from the top row. For instance, selecting the US Dollar on the left and moving horizontally to the Japanese Yen cell shows the percentage change for USD (base)/JPY (quote).
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