Gold Slips as Dollar Rebounds, Iran Risks Linger

Key Moments

Fundamental Drivers

Gold (XAU/USD) is unable to extend the previous day’s gains and encounters renewed supply during the Asian session on Friday. Market participants continue to digest the less hawkish tone in the Federal Open Market Committee (FOMC) Minutes released on Wednesday, while the US Dollar recovers from an over one-week low. The slight rebound in the Greenback, supported by expectations of further policy tightening by the US Federal Reserve and ongoing geopolitical risks, is pressuring the precious metal and discouraging aggressive bullish positioning after the recent rebound from Wednesday’s one-week low.

Fed Minutes and Rate Expectations

The minutes from the June 16-17 FOMC meeting show policymakers were not aligned on the future path of interest rates. According to the record, many participants indicated that the appropriate level of the federal funds rate would be within or slightly below the existing target range by the end of this year. At the same time, officials signaled that some additional policy firming would likely be appropriate, given that upside risks to inflation remain elevated.

Data from the CME Group’s FedWatch Tool indicate that market participants are still assigning nearly an 85% probability to at least one Federal Reserve rate increase before year-end. This backdrop is lending support to the US Dollar and limiting the appeal of non-yielding assets such as Gold.

Geopolitics, Oil, and Market Sentiment

Geopolitical developments involving the United States and Iran are also shaping risk sentiment and inflation expectations. A renewed flare-up of tensions has shifted attention back to oil prices and their implications for inflation and the global interest rate outlook.

The US Central Command (CENTCOM) reported conducting airstrikes on Thursday against 90 Iranian military targets, including air defense systems, missile sites, and naval logistics infrastructure along Iran’s coastline. Iran responded by launching missiles and drones at US military facilities in Bahrain and Kuwait and cautioned that any additional American strikes would provoke a broader regional reaction, complicating diplomatic efforts.

Market anxiety subsequently eased after US President Donald Trump told reporters on Thursday that Iran had contacted the US to pursue a deal. A White House official also indicated that the US remains committed to the memorandum of understanding with Iran. These conflicting signals are keeping investors cautious and suggest that stronger, sustained buying interest would be required to confirm that Gold has carved out a short-term bottom. Despite intermittent support from safe-haven flows, XAU/USD is still poised to record modest losses for the week as traders focus on further developments in the US-Iran situation.

Technical Picture for XAU/USD

From a technical standpoint, Gold continues to trade within a broader descending parallel channel and remains capped below the 200-day Simple Moving Average (SMA), maintaining a bearish bias in the near term even as momentum has shown some improvement.

The channel’s upper boundary near $4,156.03 represents the first technical hurdle, followed by the 200-day SMA around $4,493.66, which together define a robust resistance zone above spot prices. On the momentum side, the Moving Average Convergence Divergence (MACD) histogram has turned positive, and the MACD line has crossed above the signal line, pointing to the possibility of a corrective bounce within the broader bearish structure. However, the Relative Strength Index (RSI) hovering around 45 still indicates only limited buying interest rather than a strong bullish reversal.

On the downside, the current session’s swing low in the $4,109-$4,108 area acts as initial support. A deeper pullback would bring the lower boundary of the descending channel near $3,758.88 into focus, a region where buyers would typically be expected to step in if downside pressure intensifies.