Gold Near Recent Lows on Fed, Geopolitical Risks

Key Moments

Gold Pressured Despite Softer Dollar

Gold (XAU/USD) is trading with a negative tone for a fourth straight session on Thursday, remaining close to the one-week low around the $4,020 level reached in the prior session. The metal is struggling to attract sustained buying interest, even as the US Dollar stays under pressure during Asian trading.

Market participants are focusing on renewed hostilities between the United States and Iran, which have revived worries about inflation and strengthened expectations for a possible US Federal Reserve rate hike in 2026. These factors are weighing on the non-yielding metal and limiting the impact of the mildly weaker US Dollar.

The Dollar has been on the back foot following the release of the latest Federal Open Market Committee (FOMC) Minutes, which did not deliver a clear hawkish surprise. This softer policy read is offering some support to bullion, but not enough to shift the broader bearish tone.

Mixed Fed Signals and Inflation Risks

The Minutes from the June 16–17 FOMC meeting, published on Wednesday, showed policymakers were split on the future path of interest rates. According to the document, many participants indicated that the appropriate level of the federal funds rate would be within or slightly below the current target range by the end of this year.

This guidance, combined with last Thursday’s weaker-than-expected US Nonfarm Payrolls (NFP) report, has done little to significantly alter market pricing for rate moves. At the same time, Fed officials highlighted that upside inflation risks remain elevated and suggested that some additional policy firming is likely to be needed to guide inflation back to the 2% objective.

Traders are currently assigning roughly a 70% probability that the Fed will raise interest rates in September. This view, reinforced by ongoing geopolitical risk, is helping to limit deeper losses in the US Dollar and is curbing aggressive bullish positioning in gold.

Rising US-Iran Tensions Add to Market Uncertainty

Geopolitical developments in the Middle East are adding another layer of complexity for investors. In the latest escalation, the US military launched a fresh round of strikes against Iran, described as retaliation for Tehran’s attacks on commercial vessels in the Strait of Hormuz.

Iran, in turn, has been “continuously targeting US military installations and assets across Bahrain and Kuwait.” The situation further intensified after US President Donald Trump stated on Wednesday that “the ceasefire with Iran was now over.”

This evolving backdrop is helping to sustain concerns about inflation and global risk sentiment, while also supporting expectations of tighter Fed policy. As a result, any upticks in gold prices are being viewed with caution and are at risk of being sold into.

Data, Fed Speeches, and Middle East Risks in Focus

The current environment appears to favor US Dollar strength over gold, suggesting that attempts by XAU/USD to recover may prove shallow. Market attention is now turning to upcoming US Weekly Initial Jobless Claims, which could offer fresh insight into labor market conditions and influence rate expectations.

Additionally, comments from key FOMC members later in the session are likely to shape Dollar demand and overall risk appetite. However, the primary focus is expected to remain on developments in the Middle East, which could continue to inject volatility into global financial markets and create short-term trading opportunities in precious metals.

Technical Picture: Gold Stays in a Bearish Structure

From a chart perspective, XAU/USD continues to exhibit a bearish near-term profile, trading below the 200-day Simple Moving Average (SMA) and remaining confined within a descending parallel channel. The Moving Average Convergence Divergence (MACD) indicator has shifted into positive territory, while the Relative Strength Index (RSI) stands at 40.26, having only modestly rebounded from oversold conditions.

This technical configuration suggests that any corrective bounce is likely to meet strong selling interest near the upper boundary of the channel, situated around $4,247.94. A decisive break above this level would be required to alleviate current downside pressure, with the next important resistance seen at the 200-day SMA, close to $4,492.08.

On the downside, the lower band of the descending channel, near $3,811.93, is emerging as a key support area. Buyers would likely seek to defend this region to preserve the broader uptrend should the ongoing correction deepen.