Gold Rises as Dollar Softens, Bears Keep Control Now

Key Moments

Gold Gains Modestly as Dollar Pulls Back

Gold prices, as tracked by XAU/USD, extended a modest rebound on Friday, advancing from the $3,983-$3,982 zone toward the upper end of the day’s trading band ahead of the European session. The move came as the US Dollar slipped back from Thursday’s peak, which had marked its strongest level since May 2025. The softer Greenback, tied to ebbing expectations for additional Federal Reserve rate hikes, offered some support to the metal.

Even so, the recovery in bullion remained limited, with the broader backdrop still favoring caution among buyers. The prevailing market narrative continued to suggest that any strength in gold could be vulnerable to renewed selling.

Inflation Data, Oil Prices, and Fed Expectations

On Thursday, data from the US Bureau of Economic Analysis (BEA) showed that the headline Personal Consumption Expenditures (PCE) Price Index quickened to a 4.1% year-on-year pace in May from 3.8%. The core PCE measure, which excludes food and energy, climbed 3.4%.

Market participants took the view that inflation may have reached, or be close to, a peak, influenced by the recent decline in Crude Oil prices to pre-war levels following an interim peace agreement between the US and Iran. This assessment prompted a slight increase in the belief that the Federal Reserve could keep rates unchanged, sparking some profit-taking in the US Dollar.

However, according to the CME Group’s FedWatch Tool, traders continued to assign more than an 80% probability that the Fed would implement at least one additional rate increase before year-end. This conviction was reinforced by remarks from Chicago Fed President Austan Goolsbee, who stated that underlying inflation pressures remain “too ​high and trending in the wrong way.” New York Fed President John Williams also postponed his anticipated timeline for returning inflation to the 2% objective and reiterated that price pressures are still excessive, though he expects some moderation this year.

Geopolitical Tensions Provide Additional Support for the Dollar

Reports that Iran’s Islamic Revolutionary Guard Corps (IRGC) had attacked a Singapore-flagged vessel in the Strait of Hormuz rekindled concerns over the durability of the preliminary US-Iran peace accord. These developments were seen as factors that could help stem any deeper pullback in the US Dollar, in turn restraining gold’s upside.

Combining the geopolitical backdrop with the still-hawkish policy expectations, the fundamental environment continued to lean in favor of sellers rather than buyers. As a result, XAU/USD stayed on track for its fourth consecutive weekly decline.

Technical Picture: Rebound Faces Stiff Overhead Barriers

From a technical standpoint, the recovery in gold that began on Thursday from oversold conditions stalled just below the former horizontal support near $4,050, which has now turned into a resistance area. The inability to sustain gains above that level, together with repeated failures around the 100-period Simple Moving Average (SMA) and renewed weakness below $4,000, underscored a negative short-term bias for XAU/USD.

The Moving Average Convergence Divergence (MACD) indicator has started to turn modestly positive, signaling some stabilizing momentum. However, the Relative Strength Index (RSI), hovering near 36 and remaining under the neutral 50 threshold, continued to point to lingering downside pressure rather than a clear trend reversal.

Key Technical Levels for XAU/USD

On the upside, the first key resistance remains at the $4,050 area. A decisive break above that zone could open the door for a move toward $4,100. Even if that level is reached, any extended rally is still expected to attract sellers and potentially stall in the vicinity of the 100-period SMA, currently at $4,231.08. A failure to challenge that moving average is likely to leave the near-term outlook skewed to the downside.