Key Moments
- XAU/USD stays under pressure above the $4,500 level while the US Dollar trades near a six-week high.
- Gold remains confined in a descending channel on the 4-hour chart, with key resistance near $4,657.44 and support around $4,362.54.
Gold Holds Weak Tone as Dollar Strength Persists
Gold (XAU/USD) is trading on the defensive heading into the European session on Friday, with sellers re-emerging while the metal manages to stay above the $4,500 psychological threshold. Follow-through downside remains limited for now, but the backdrop continues to favor the US Dollar (USD), which is holding close to the six-week peak reached on Wednesday.
The Dollar is being supported by expectations that the Federal Reserve (Fed) will maintain a restrictive policy stance. Mixed signals surrounding a potential peace agreement between the United States and Iran are also underpinning the Greenback’s role as a reserve currency, adding pressure on bullion.
Fed Expectations Shift Toward Further Tightening
According to the article, market pricing now fully reflects no chance of a Fed rate cut for the remainder of 2026. Instead, investors are positioning for at least one interest rate increase before year-end as they respond to rising energy prices and concerns about consumer inflation.
Minutes from the April 28-29 FOMC meeting, released on Wednesday, indicated that policymakers were inclined to keep rates elevated, or potentially raise them, if inflation stays persistently above the 2% objective. Data from the CME Group’s FedWatch Tool show that market participants see more than a 60% probability that the US central bank will lift the federal funds rate by 25 basis points at the December meeting.
This policy outlook has driven a notable rise in US Treasury yields, reinforcing support for the USD and weighing on non-yielding assets such as gold.
Iran Tensions Sustain Geopolitical Risk Premium
On the geopolitical front, a senior official from Iran stated that no agreement has been finalized with the United States, though the differences between the two sides have narrowed. Nonetheless, Iran’s uranium enrichment activities and its control over the strategically important Strait of Hormuz remain central obstacles.
US Secretary of State Marco Rubio warned that Iran’s intention to levy a toll on vessels transiting the Strait is acting as a barrier to a potential peace arrangement. US President Donald Trump reiterated that the United States does not support tolls on the Strait of Hormuz and said that the US military will retrieve Iran’s stockpile of highly enriched uranium.
These developments are keeping geopolitical risk in focus in a manner that appears to favor USD strength. In this environment, the prevailing bias for gold continues to tilt lower, with the downside still seen as the path of least resistance.
Technical Picture: Downtrend Channel Caps Upside
From a technical standpoint, XAU/USD remains confined within a broader descending channel on the 4-hour chart and is trading beneath the 200-period Exponential Moving Average (EMA). This configuration is restraining any near-term bullish attempts, although prices have seen some stabilization.
The upper boundary of the falling channel, located around $4,657.44, aligns with the 200-period EMA and forms a dense resistance zone. As long as gold trades below this confluence, any recovery efforts are likely to face significant selling interest.
Momentum indicators present a mixed picture. The Moving Average Convergence Divergence (MACD) has crossed into positive territory, while the Relative Strength Index (RSI) is fluctuating near the 45 level. These readings suggest that immediate downside momentum may be easing, but they do not yet indicate a clear reversal against the broader structural downtrend. A decisive break above the clustered resistance around $4,657.44 would be required to meaningfully alleviate the existing bearish pressure.
On the downside, the lower edge of the parallel channel, near $4,362.54, serves as the next significant support area. A sustained move below this level would confirm the prevailing bearish structure and could pave the way for additional losses in the sessions ahead.
US Dollar Performance Against Major Currencies This Month
The table below shows how the US Dollar has moved in percentage terms against key major currencies this month. Over the period, the US Dollar has been strongest versus the Japanese Yen.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | 1.00% | 1.31% | 1.61% | 1.55% | 0.78% | 0.56% | 0.68% | |
| EUR | -1.00% | 0.29% | 0.59% | 0.51% | -0.19% | -0.42% | -0.34% | |
| GBP | -1.31% | -0.29% | 0.30% | 0.25% | -0.49% | -0.72% | -0.64% | |
| JPY | -1.61% | -0.59% | -0.30% | -0.07% | -0.83% | -1.16% | -0.97% | |
| CAD | -1.55% | -0.51% | -0.25% | 0.07% | -0.76% | -1.10% | -0.88% | |
| AUD | -0.78% | 0.19% | 0.49% | 0.83% | 0.76% | -0.24% | -0.15% | |
| NZD | -0.56% | 0.42% | 0.72% | 1.16% | 1.10% | 0.24% | 0.09% | |
| CHF | -0.68% | 0.34% | 0.64% | 0.97% | 0.88% | 0.15% | -0.09% |
The heat map reflects percentage changes between major currencies. The base currency is taken from the left column and the quote currency from the top row. For instance, selecting the US Dollar as the base currency on the left and moving across to the Japanese Yen column shows the percentage move in USD/JPY for the month.
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